TAX SETTLEMENT & OFFERS IN COMPROMISE
HANDLING TAX DEBTS THROUGH INSTALLMENT AGREEMENTS
If you cannot qualify for an Offer in Compromise or Bankruptcy and cannot pay your tax in full, you may be able to negotiate an Installment Agreement with the IRS. Because of penalties and interest, borrowing money from a traditional lender such as a bank or even a credit card company may still be cheaper than entering into an Installment Agreement. Depending on the type of loan, the interest may be deductible, whereas penalties paid to the IRS are never deductible and generally the interest will not be either.
Short Term And Longer Term Installment Agreements
If you have the ability to pay your tax, interest and penalties in installments that will not exceed 24 months, an Installment Agreement may be relatively easy to negotiate. If the payment period goes beyond that the IRS will scrutinize the taxpayer's income and expenses much more closely and impose national standard living expenses. National standard living expenses are the maximum expenses the IRS will allow regardless of the actual amount of your living expenses. If the differences are substantial, negotiating an Installment Agreement can become more difficult and taxpayers may be forced to consider living more modestly. To discuss your specific circumstances and the options available for resolving your outstanding tax matter, please contact our office in Charleston today for an initial consultation with an experienced tax lawyer.
In Business Trust Fund Installment Agreements
Small businesses who currently have employees can qualify for an In-Business Trust FundExpress Installment Agreement (IBTF Express IA). In general, to qualify for an IBTF Express IA, you must owe $25,000 or less and must be able to pay the debt within twenty-four months or prior to the Collection Statute Expiration Date, whichever is earlier.
Fresh Start Initiative Streamlined Installment Agreements
Fresh Start Initiative Streamlined Installment Agreements are divided into two categories, balances due of $25,000 or less and balances due of $25,001 to $50,000. In general, to qualify for a Streamlined Installment Agreement, you must pay the debt within seventy-two months or prior to the Collection Statute Expiration Date, whichever is earlier.
If the amount of the tax you owe is greater than $10,000, it is likely that the IRS will file a Tax Lien even if you enter into an Installment Agreement. Tax Liens are generally filed at the court house in the county where you reside. The IRS may also file them in other states or counties where you own real property. The filing of a tax lien will negatively impact the taxpayer's credit score which is another reason to try to pay the tax in full.
The IRS will not Levy property or wages while an installment agreement is in place. Also, they will not Levy property or wages while a request for an installment agreement is pending, for 30 days after a request for an Installment Agreement is rejected and during an appeal of the rejection of a request for an Installment Agreement.
Compliance! Compliance! Compliance!
The importance of being current, or being in voluntary compliance, cannot be overstressed. The IRS will not enter into an Installment Agreement with a taxpayer who is not current. Not being in compliance can derail the entire settlement process, whether you are trying to discharge tax debts through bankruptcy, the filing of an Offer in Compromise, or by entering into an Installment Agreement. Income tax returns that have not been filed or taxes for the most recent years that have not been paid create a multitude of problems. We all know the three rules of real estate: location, location, location! Consider these the three rules of tax law: compliance, compliance, compliance!
Get A Game Plan!
A well devised plan for discharging tax indebtedness is important and almost impossible to achieve without the help of an experienced professional who understands the process or various processes that may be involved, what is possible and what is not, and the full range of remedies available. Remember, there are often multiple solutions to the settlement of a tax debt. As an attorney with over 30 years in practice, John Kachmarsky and the staff at the Law Office of John Kachmarsky have that experience and knowledge.
Contact our Charleston, South Carolina law office today to make an appointment for an initial consultation.