What can you do if you have a tax liability and you cannot pay it?
There are four solutions open to you. They are: an Installment Agreement, an Offer in Compromise, know-collectiple status or bankruptcy.
This article will deal only with the first, Installment Agreements.
Installment Agreements are readily available. Although entering into an Installment Agreement can be easy to do, it is not a right.
If you file your tax return on time and cannot pay the tax but expect to be able to do so within a reasonable period of time, say 90 days, don't even bother to ask for an Installment Agreement. Just go ahead and pay the tax in three or four payments.
On each check write your Social Security Number, a slash, the Form number, a slash, the year (123-45-6789/1040/2003).
If you need more time then request an Installment Agreement. This can be done on the phone through Taxpayer Service (1-800-829-1040). It may take up to an hour or more to make contact with a person, so patience is required.
If you need more time than that, then you should request an Installment Agreement on Form 9465 Installment Agreement Request.
Installment Agreements come in two sizes: less than $25,000 and more than $25,000.
An Installment Agreement for less than $25,000 is generally relatively easy to obtain.
However, we would like to warn you at this point that when you deal with the Internal Revenue Service anything you say might be used against you. Remember, the function of the Service is to administer the system for assessing and collection tax. They want money from you and they want it right now. Do not be fooled into thinking the sweet voice on the phone has your interests at heart. He or she has the government's interests at heart and so anything you say that makes it easier to collect tax will be used for that purpose.
We never recommend that an individual represent himself or herself when dealing with tax authorities.
The IRS is going to want to know if you have any assets than can be sold to satisfy the debt; boats, stocks, rental property or equity in your home. Generally if you owe less than $25,00 and can pay the tax in a year or so they will let you do that.
But if you owe more than $25,000 in tax they can be become very intrusive, very inquisitive and very insistent.
Contact us for a free consultation.
We suggest you do not represent yourself.
The I.R.S. is your adversary in these matters.
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