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November 17, 2014

Installment Agreements Provide Taxpayers a Viable Collection Alternative When Facing Federal Tax Liabilities

The tax attorneys at Nardone Law Group in Columbus, Ohio, frequently advise individual taxpayers and businesses on how to utilize the Internal Revenue Service’s collection alternatives to manage their federal tax liabilities. In many instances, taxpayers are contacted by IRS revenue officers, whose sole purpose is to collect the tax from that taxpayer as quickly as possible. Aside from simply paying the tax liability in full, there are various collection alternatives available to taxpayers that can help reduce or eliminate tax liabilities arising from an IRS audit or examination, including, but not limited to: (i) installment agreements, (ii) offers-in-compromise, (iii) currently not collectible status, (iv) discharging taxes in bankruptcy, and (v) challenging the underlying tax liabilities.

This article is the first of a series that will focus on installment agreements as IRS collection alternatives. This article provides a general description of installment agreements and some of the various types that exist. Future articles in the series will provide a more in-depth discussion of each type of installment agreement, outlining the requirements and benefits involved. First, it is helpful to understand what an installment agreement is and how it can help a taxpayer manage their federal tax liabilities.

Installment Agreements as a Collection Alternative

According to the Internal Revenue Manual, installment agreements are “arrangements by which the Internal Revenue Service allows taxpayers to pay liabilities over time.” The IRS’ goal is for delinquent taxpayers to achieve full payment, but in some cases, Partial Payment Installment Agreements may be granted. Taxpayers are encouraged to pay their liabilities in full to avoid the costs of an installment agreement, which include a user fee, the accrual of penalties and interest, and the possible filing of a Notice of Federal Tax Lien.

There are a variety of installment agreements that businesses and individuals may qualify for, depending on the specific circumstances of the particular case. Some of the pertinent criteria to be considered are the amount of debt and the type of tax involved. Below are some of the possible installment agreements, available to businesses and taxpayers as an IRS collection alternative.

Types of Installment Agreements

1. Guaranteed – provide qualified taxpayers who have a one-time account delinquency the right to any agreement, if their taxes are $10,000 or less, and certain other conditions are met.

2. Streamlined – has two tiers – $25,000 or less, and $25,001 to $50,000 – and can be used on income tax liabilities, and out of business modules.

3. In-Business Trust Fund Express – can be utilized without securing financial information on BMF accounts, up to $25,000.

4. Routine – accounts are considered ‘routine installment agreements’ when the type of debt does not meet the criteria for any other type of installment agreement (Guaranteed, Streamlined, or IBTF-Express).

5. Partial Payment – if full payment cannot be achieved by the Collection Statute Expiration Date, and taxpayers have some ability to pay, the IRS can enter into Partial Payment Installment Agreements.

NLG Comment: Our series on installment agreements as a collection alternative will continue, with articles featuring each of the foregoing types of agreements, providing a detailed look at the requirements and benefits of each possible agreement. If you have questions about installment agreements, or IRS collection alternatives in general, contact one of our experienced tax attorneys today.

Contact Nardone Law Group

Nardone Law Group represents individuals and businesses in federal tax matters, including collection alternatives, such as installment agreements. If you or your business have been contacted by an IRS revenue officer, or are struggling with tax liabilities, you should contact one of our tax attorneys today. Nardone Law Group’s tax attorneys have vast experience representing clients before the IRS. We will thoroughly review your case to determine what options and alternatives are available, including an installment agreement.

Contact us today for a consultation to discuss your case.

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November 17, 2014

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