If you have neglected or fallen behind on your tax payments, you can work with the IRS to get on a payment plan. Whether short-term or long-term, this payment plan can allow you to take control of the tax debt that you owe.
If you are interested in learning more about how you can use the help of an experienced Sacramento and Roseville accountant for IRS payment plans, get in touch with Cook CPA Group today. An accountant from Cook CPA Group can discuss the process of entering into a payment plan with the IRS during a free and confidential consultation.
Understanding IRS Payment Plans
Instead of paying all of your tax debt at once, a payment plan with the IRS allows taxpayers to pay off their debt in manageable amounts over a long period of time. Taxes that are paid through payment plans, interested taxpayers should note, are still subject to penalties and interest.
When you enter into a payment plan with the IRS in Roseville or Sacramento, you agree to pay only what you can afford each month. This payment plan can last for up to 10 years, which is the IRS’s statute of limitations on tax collection. During the time that you are making payments as part of your installment agreement, the IRS will cease its collection actions.
If you completely neglect your unpaid taxes and fail to enter into a payment plan, you may have a tax lien or levy placed on you. With a tax lien, the government claims the assets that belong to a taxpayer who has not paid all of their taxes. A tax levy is the actual seizure of property by the IRS.
Types of IRS Payment Plans in Sacramento + Roseville, CA
There are a few different types of payment plans that can be entered into with the IRS. One of them, known as a Guaranteed Installment Agreement (GIA), is for taxpayers that owe $10,000 or less. The debt will be paid over a 36-month period. Another type is known as a Streamlined Installment Agreement (SLIA) and is for taxpayers that owe $50,000 or less to the IRS. This payment plan lasts 72 months. If a taxpayer owes more than $25,000, they will have to make their monthly payments using direct debit payments. Debts that are between $50,000 and $100,000 can be paid with payment plans that last 84 months.
The amount that you owe as part of your payment plan each month depends on a variety of factors, including your income, assets, amounts owed, monthly living expenses, and whether or not you are able to afford to pay off the debt over a certain time period.
Roseville and Sacramento taxpayers that are interested in paying off their tax debt by entering into a payment plan should note that there are fines attached to payments plans. Setting up a direct debit agreement with the IRS incurs a fee of $52, while a fee of $105 is charged when a taxpayer enters into a standard payroll deduction agreement. Low-income taxpayers only have to pay a fine of $43 and taxpayers that are able to pay off all of their debt within 120 days are not charged a fee at all.
Individuals who enter into payment plans will have to make consistent, on-time payments for the duration of the plan to stay entered into the agreement. Some late payments are able to be paid within 30 days. However, unmade payments will result in cancellation of the plan.
Entering into an Offer in Compromise
Taxpayers whose tax debt has become unmanageable may be able to pay off their debt through an offer in compromise with the IRS. In an offer in compromise, a taxpayer pays a small portion of what they owe in installments over a period of time. The total amount that they’ll have to pay is less than the total amount that they owe. The IRS enters into offers in compromise with taxpayers that are facing financial hardship and are unable to pay off their debts in full.
As beneficial as an offer in compromise may seem, it is usually more advantageous to enter into a payment plan rather than an offer in compromise. An offer in compromise should be treated as a last resort for people who have fallen behind on their tax payments.
How to Apply for an IRS Payment Plan in California
Individuals who would like to get on a payment plan can apply either by mail or by going to the IRS website. Individuals can only apply for a payment plan online if they are applying for a long-term plan and owe less than $50,000 or if they are applying to be on a short-term plan and owe less than $100,000.
When you apply, you will need to have certain information available. This includes your email address, the address on your most recently filed tax return, your date of birth, your filing status, your Social Security Number, your financial account number, and your name.
CPA for IRS Payment Plans in Sacramento and Roseville
Don’t let unpaid taxes to be a nuisance in your life. Allow a Sacramento and Roseville CPA for IRS payment plans from Cook CPA Group to help you enter into a payment plan that will allow you to pay your tax debt over an extended period of time. Get in touch with a CPA from Cook CPA Group to learn more about how you can pay your tax debt with an IRS payment plan.