IRS Payment Plan - Your Guide To Set Up An IRS Tax Payment Plan

By Houston TX CPA Jim Trippon

IRS Payment Plans are an area my CPA firm in Houston TX gets questions about all the time. If you owe the IRS money and cannot pay it in single lump sum, an IRS payment plan may be your only hope to avoid very serious consequences with the IRS such as asset seizures, bank and wage levies and federal tax liens. Our CPA Firm works with taxpayers not only in Houston, but also nationwide to negotiate favorable IRS payment plans. Here is the truth about how IRS Payment plans really work.

If you currently owe tax debts to the IRS, payment plans are available. The primary payment plans offered to both individual taxpayers and businesses are installment plans or offers to compromise. While both options offer advantages to the taxpayer, most tax professionals will attempt to reach an agreement in terms of a partial payment installment plan as it is less time consuming and often easier to achieve than an offer to compromise.

A partial payment installment plan involves the individual taxpayer making monthly payments to the IRS for the purpose of repaying their tax debts. The payments do not constitute the entire tax debt owed, as once the individual completes their payment plan, the remainder of the tax debt will be forgiven by the IRS. This repayment option is available to both individuals and businesses.

If the tax debt is less than $25,000, a 60 month repayment plan option may be an option, also referred to as a small dollar repayment plan.

If the individual tax payer opts to attempt to reach an Offer to Compromise, less than the original tax debt owed will be repaid by the taxpayer. This option is generally more aggressive in reducing the taxpayer's overall debt, but more time consuming and difficult to receive agreement on with the IRS.

For more information about IRS payment plan options or for assistance in negotiating with the IRS in regard to your current IRS tax debt, call to speak with one of our tax professionals.