If
you cannot pay all that you owe now and do not qualify for
an Offer In Compromise, a Payment
Agreement may be your next best option. Payment Agreements
allow the full payment of your debt in smaller, more manageable
amounts, usually in equal monthly payments. The amount of
your installment payment will be based on the amount you owe
and your ability to pay that amount within the time available
to the IRS to collect the tax debt from you.
You
should be aware, however, that a Payment Agreement is more
costly to you than paying all the taxes you owe now or borrowing
funds to pay the amount you owe. Why? Because the IRS charges
interest and penalties on the tax you owe, and charges interest
on the unpaid penalties and interest that have been charged
to your tax account.
So,
while you are making payments on your tax debt through a Payment
Agreement, the IRS continues to charge interest and penalties
on the unpaid portion of that debt. The interest rate on a
bank loan or cash advance on your credit card may be lower
than the combination of penalties and interest that the IRS
charges.
Another
cost associated with a Payment Agreement is the initial setup
fee of $43 charged by the IRS.
Even
if you agree to a Payment Agreement, the IRS may still file
a Notice of Federal Tax Lien to secure the government's interest
until you make a final payment. However, the IRS cannot levy
against your property (1) while your request for a Payment
Agreement is under consideration, (2) while your agreement
is in effect, (3) for 30 days after your request for an agreement
has been rejected, or (4) for any period while an appeal of
the rejection is being evaluated by the IRS.
For
prompt evaluation of your case, we encourage you to click
here to register for our Tax Advisory Service. You
may also contact us using our toll-free number at 866.494.6829.
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