Do I have to pay while my installment agreement form is being processed?

No, once you file you do not HAVE to make your installment payment until it is approved, however we highly recommend that you start making these payments right away, as if your plan is approved.

Does it cost to request an installment agreement?

Aside from our fees, there is a cost for applying. Check the costs at the IRS site https://www.irs.gov/payments/payment-plans-installment-agreements#plandef

What is Trust Fund Penalty?

A Trust Fund in terms of employment tax should not be mistaken with a trust fund in terms of wealth management. This is the payroll tax amount assessed to the officers of the business. Tax resolution can help reduce and or arrange the payment of these taxes.

What is a Trust Fund Recovery Penalty (TRFP)?

A Trust Fund Recovery Penalty can be assessed if the unpaid trust fund taxes cannot be immediately collected from the business. This often happens if the business falls on hard times and taps into that fund for any reason. According International Revenue Code 6672(a) an individual can be held liable for penalty for willful failure to collect, account for, or pay to the IRS the taxes for the business.

Who is Held Responsible for the TRFP?

According to the IRS, the TRFP can be assessed against any person who is: responsible for collecting or paying withheld employment taxes, willfully fails to collect or pay the taxes.

Installment Agreement

What is an Installment Agreement?

An Installment Agreement allows a taxpayer to “make payments” to the IRS for taxes owed. There is a variety, each with their own set of benefits. The IRS allows you to break down your debt into monthly installments if you are unable to pay the amount owed in full in less than 120 days. This allows you to pay down your tax debt while avoiding wage garnishment, levies and collections. Your account will still accrue penalties and interest. But these will be assessed against a smaller amount as you pay down the debt. In addition, paying against your tax debt will demonstrate your “good faith” to the IRS.

How Does the IRS Decide How Much My Monthly Payment Will Be?

The IRS allows you to determine your minimum monthly payment based on what you can afford. However, they will encourage you to pay as much as possible to avoid additional penalties and fees. Yet, offering too low an amount or not telling the IRS a desired minimum payment, will permit the IRS to divide your total into 72 monthly payment installments.

Guaranteed IRS Installment Agreement

If you meet certain IRS criteria, you or your business may be guaranteed eligibility for an installment plan. The best part of a Guaranteed Installment Agreement is that the IRS does not require you to complete a financial statement or verification.

You may be eligible for a guaranteed installment agreement if you:

Owe $10,000 or less in tax debt
Agree to allow the IRS to take all future returns to pay down the debt
Have filed all required tax returns
Agree to file and pay on time for all future returns
Agree to pay off your installment plan within 72 months or less

Streamlined Installment Agreement

A Streamlined Installment Agreement is best for you if you owe $50,000 or less in tax debt. In addition, you do not qualify for a Guaranteed Installment Agreement. This type of plan typically does not require you to complete financial statements and verification.

You may be eligible for a Streamlined Installment Agreement if you:

In-Business Trust Fund Installment Agreement

This type of agreement is best for a small business that owes $25,000 or less in tax debt. You must be able to pay off this installment plan within two years. This type of agreement does not typically require you to submit financial verification and statements.

Requirements:

A small business with employees
Owe $25,000 in tax debt or less
Agree to allow the IRS to take all future returns to pay down the debt
Have filed all required tax returns
Agree to file and pay on time for all future returns
Agree to pay off your installment plan within 24 months or less

Next Step

There are many types of installment agreements and all of them come with fees and criteria native to the specific type of agreement. It is best to seek the help of a tax professional to decide which agreement is the best fit for your financial situation and to better understand the fees and requirements necessary to apply. Give us a call today for assistance in taking the next step in deciding which agreement is best for you and your business.

We offer many tax resolution services so please refer to our services page if you are interested.