Considering an Installment Agreement with the IRS? Get the Best Payment Plan Possible
How Tax Installment Agreements Work
One tax relief option available to almost everyone is a tax payment plan or installment agreement; this is where you agree to make monthly payments towards your back tax debt, and the state of Michigan and the IRS agree not to take any other collection actions other than garnishing your tax refunds (as long as you are current with your payments). While on an installment agreement, penalties and interest continue to accrue on any unpaid tax balance, and any refunds due will continue to be garnished. Depending on the terms of your payment plan, the IRS or Michigan Department of Treasury may or may not file a tax lien against you while the agreement is in place.
Payment Amounts Vary by Situation
The IRS and state of Michigan each have their own guidelines to determine the amount of your monthly payment. In most cases, there are two types of payment plans: those that depend on how long it will take to re-pay your tax debt, and plans based on how much you can afford to pay. A good tax attorney will help you to negotiate the lowest possible payments; they already know what the IRS is likely to accept.
How Long Payment Plans Last
Absent a default, payment plans generally last until either
- The taxes are paid in full or
- The tax statute of limitations expires and it is past the time when the IRS can legally collect the tax.
A skilled tax attorney can sometimes set up payments that are not large enough to completely pay off your debt before the statute expires; any remaining amount would be forgiven by the IRS or the state.
Is a Tax Payment Plan Right For Me?
If you have an IRS or Michigan unpaid back tax debt, a tax payment plan might be the best option for you, but it is only one of many options. Every case needs a thorough analysis. Contact Ayar Law for a free consultation.