Everyone, my name is Bruce Roth and my guest today is Dave Horwood, an enrolled agent and the founder of Torchlight Tax and Financial Services. Dave, can you explain what an installment agreement is with the IRS? Are there different types and what are the implications? Okay, well with the IRS, let's say you file your taxes and you don't have the money to pay. It's pretty automatic that they will offer you an installment agreement if it's a small amount. They give you up to five years to pay it back. It's very easy to get. However, as your income increases, it becomes harder to qualify for the installment agreement. Depending on the amounts involved, you may have to provide financial data to the IRS. People may not want to disclose all their financial information to the IRS, so you have to be aware of the implications. Good, but if you find yourself at the end of a tax year without enough money to pay your taxes, don't worry. You won't go to jail and your assets won't be seized immediately. You will likely be accepted for an installment agreement. There may be a penalty, but interest will be assessed on the outstanding balance. Depending on your actions, there may be additional penalties, but we're not talking about the IRS seizing your house or bank account right away. You have the option to apply for an installment agreement yourself, which is easy to do, or if you have a tax professional like an enrolled agent handling your taxes, they can negotiate the agreement for you under a power of attorney. Thank you so much.
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Full pay 120 day agreement Form: What You Should Know
You must qualify for a short-term payment plan. 120-Day IRS Payment Plan — Texture Long-Term IRS Payment Plan — Texture As of now, the IRS is offering full payment, a short-term payment plan, and an extended payment plan. The IRS has a list of payment extension options available. It appears they accept payments in an installment agreement, but they don't yet accept an online payment extension. IRS Approves Payment Plans with 30-day or 180-Day Options — CFPB Dec 8, 2023 — Payment options include a 30-day or 180-day extension of a payment plan. Online Payment Plan Extension Application — CFPB Nov 12, 2023 — You can apply for a payment extension using the IRS's Online Payment Agreement System (the IRS has a separate portal for this). IRS Announces New Online Payment Agreement System — CFPB Aug 25, 2023 — The tax-filing industry moves to the IRS's new Online Payment Agreement System. IRS Issues Notice of Proposed Rule Changes — CFPB Sep 11, 2023 — The IRS intends to change the rules and procedures it uses to approve and process tax-filing extension applications. You'll need to use the new system. IRS Announces Online Payment Plan Extension Rule Changes — CFPB Sep 27, 2023 — Taxpayers with income exceeding 100,000 would be required to apply for an online Payment Agreement before paying at an IRS processing office. Payments Made Under the Long-Term Payment Plan Will be Tax Exempt — CFPB Mar 13, 2023 — Payments under the long-term payment plan, which gives you a lump sum if you pay off your balance over time, will be taxable as an ordinary income payment. Payments made on a short-term payment plan will not be taxed.
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