Can I Pay My Tax Debt in Installments?
June 3, 2021
As the old saying goes, death and taxes are indeed the only certainties in life. If you owe the Internal Revenue Service (IRS) more in taxes than you can afford to pay, do not panic. The IRS Restructuring and Reform Act of 1988 resulted in more rights for taxpayers like you.
While it is true that people can serve time in federal prison for not paying taxes or for filing fraudulent returns, you will not be imprisoned for being financially unable to pay your tax liability. Even when you are not facing civil litigation or criminal charges regarding your tax bill, it is still wise to consult with an experienced tax attorney to help you explore your options, including whether or not you are eligible to pay what you owe in installments.
For more than 30 years, my law firm — Zuckerman Law, LLC — has provided legal guidance and support to clients who are unable to pay their tax bills in Fort Lauderdale, Florida, as well as throughout South Florida, including Miami, Boca Raton, North Miami Beach, Sunny Isles, Hollywood, and Aventura. Before practicing law, I worked at an accounting firm before later earning my Master’s degree in Tax Law. With my extensive experience, education, and knowledge of Florida tax law, you can count on me to help you find a solution for your tax issues.
What Kind of Payment Plans
Are Offered by the IRS?
An IRS-approved payment plan allows you to pay your tax liability over an extended period of time. Although you will still incur penalties and interest, the plan should provide an avenue for you to pay the IRS without causing you significant financial distress. Doing so can also help you avoid other actions the IRS could take, such as garnishing wages or taking collection actions against you.
Short-Term Payment Plans
A short-term payment plan allows you to pay the full amount within 180 days. This shorter timeframe can help you avoid accruing higher interest and penalties over the length of the repayment period. If you can pay your taxes in full within 120 days, there are no fees for setting up an installment plan.
Long-Term Payment Plans
A long-term payment plan requires an installment agreement over a certain period, during which you will make monthly payments to pay your tax bill. Penalties and interest will continue to accrue until the entire sum is paid in full. You will also be required to pay fees to set up the plan.
Do I Qualify for a Payment Plan?
If you owe the IRS less than $10,000, you likely will be automatically approved to pay your full balance in installments within three years. You will not have minimum monthly IRS payments to meet.
For balances between $10,000 and $25,000, your approval is not guaranteed, and you will need to pay the balance in full within 72 months (six years). Monthly minimum payments of the total sum owed, divided by 72, will be required.
If you owe between $25,000 and $50,000, you will be required to provide the IRS with additional financial information, including income and expenses. Monthly minimum payments over 72 months are also required.
If your balance exceeds $50,000, the IRS will conduct a comprehensive review of your income, assets, investments, and bank accounts. You may be required to sell some assets to pay the balance. Monthly payment amounts will be based on your specific agreement with the IRS.
Can I Revise an Existing
Payment Plan if Necessary?
There are certain revisions you can make online to an existing payment plan. These include:
Changing the monthly payment amount
Changing the monthly due date
Changing your bank account information
Converting a current payment method to a direct debit agreement
Reinstating a plan after you have defaulted on the agreement
For some existing plans, you may be unable to change the monthly payment amount. If you are unable to afford the amount determined by the IRS, you will need to file additional forms to revise the agreement.
How Zuckerman Law, LLC Can Help
Being unable to pay your taxes can be overwhelming. The payment plan options available may help you pay what you owe in a way that is manageable for you until you can wipe the slate clean. The first step you can take toward settling your debt is retaining a qualified tax attorney for reliable legal counsel.
My firm, Zuckerman Law, LLC, is dedicated to providing trusted legal guidance to clients in Fort Lauderdale and throughout South Florida, including Miami, Boca Raton, North Miami Beach, Sunny Isles, Hollywood, and Aventura, Florida. My top priority is to help guide you toward a more secure financial future. My goal is to use my knowledge and experience to answer your questions and help you explore all of your tax-payment options. Together, we can come up with a plan that can help you work toward the debt-free life you deserve.
So if you or someone you know owes a significant amount in taxes, you do not have to face this challenge on your own. Call my office today to schedule a time to talk about your tax liability and the options you have for paying your debt off. With more than three decades of tax law experience, I know how the IRS works — and I’d be happy to use that knowledge and experience to craft a solution that can help you pay your tax debts and achieve financial stability. Reach out to my office today to learn more!