Saturday, March 14, 2015

When to Opt for Installment Plans for Tax Debt

Qualifying for an offer in compromise (OIC) can be tough, especially with the rigorous requirements and eligibility guidelines. If your OIC is rejected by the IRS, you have the right to appeal their decision; however, if there’s little or no change in the gravity of your financial circumstances, your appeal would probably get rejected.

If that happens, you can explore other options to settle your tax debt, usually with the help of a knowledgeable tax lawyer. In fact, it’s better to consult one before you even file for an OIC in the first place.

One of the alternatives a tax lawyer may recommend is entering an installment agreement with the IRS. Like other types of installment plans, the IRS will set the term (in months) you’re allowed to pay off your debt. They will also specify the amount you need to pay every month, which will be based on your total debt, your assets, and your ability to pay.

Take note that there will still be interests included in your monthly payments, which can make your total payment more expensive than what you originally owe. It could take years for you to satisfy all your debt, too. If you fail to stick to the payment scheme, the IRS will consider the agreement a default, which could get you in bigger trouble with the agency. Make sure to discuss your individual situation with a skilled tax lawyer to determine if an installment agreement is truly apt for you.

No comments:

Post a Comment