The IRS encourages you to pay your back taxes as quickly as possible. For those individuals or businesses not able to resolve a tax debt immediately, a tax installment agreement can be a reasonable payment option. Tax installment agreements allow for the full payment of the tax debt in smaller, more manageable amounts over time.
To be eligible for a tax installment agreement, all returns that are due must first be filed. Installment agreements generally require equal monthly payments. The amount of an installment payment will be based on the amount of back taxes owed and on the taxpayer's ability to pay that amount within the time legally available for the IRS to collect.
By law, the IRS has the authority to collect outstanding federal back taxes for ten years from the date of assessment. (Source IRS)
Taxpayers who already have a tax installment agreement may still find help. The amount previously agreed to may be lowered if circumstances show your ability to pay has decreased. A Collection Information Statement (IRS form 433-A and/or 433-B) may have to be completed to further illustrate your financial situation.
Things to keep in mind:
- The goal for OMNI is to demonstrate to the IRS or the State that you cannot pay all your back taxes, therefore another resolution is required
- The advantage of an Installment Agreement is that no enforced collection takes place while the taxpayer is on the plan (provided the client doesn't default).
- The disadvantage of an Installment Agreement is that interest and perhaps penalties continue to accrue every year.
Call OMNI Financial today for a free consultation and more information about back tax installment agreements at 800-540-0433