If you’re looking at a tax bill that you cannot afford at the moment, one potential option is to ask the IRS to agree to an installment plan. Essentially, they give you an extended time frame and you must make installment payments on a set schedule until the debt is covered. This saves you from the trouble of paying the entire bill at one time, but you still have to settle up the debt eventually.
The IRS has made some recent changes to the process, citing their People First initiative. A few important highlights include:
- Short-term repayment plans used to offer only 120 days to pay off the taxes that were owed. That has been expanded by 50%, raising it to 180 days.
- An Offer in Compromise essentially means agreeing to compromise and make a payment that is lower than what you owe. If you have done this but now cannot even make that payment, at least temporarily, the IRS will be flexible and work with you to find a solution.
- Some payers who already have plans set up may be able to alter those plans. For instance, they may be able to choose a new due date that works better for them or ask for their payments to be lowered. Many times, lower payments are possible over a longer period of time.
- In some cases, rather than defaulting a payment plan based on money owed, the IRS will simply add that money to the existing plan.
Those who owe fees and interest may still need to pay these, even when using the different payment options offered by the IRS. However, on the whole, it is clear that the government is trying to make things easier for taxpayers to address their specific needs at this time.
What are your options?
Knowing what to expect as you get started is just the first step. Make sure you look into all of your legal options. Having an experienced team on your side can help you avoid mistakes and ensure that you do not overlook any crucial options.