Let’s talk about paying your taxes with an installment agreement. An installment agreement is where you pay your liability to the IRS in monthly payments. It includes penalties and it includes interest. The amount of money that you owe is a function of what program you’re eligible for.
For example, if you owe less than $25,000, it’s somewhat easy to get into an installment agreement.
If you owe $50,000 or less, it is a little harder to get into an installment agreement and the IRS wants their payments via direct debit, where they take the money directly out of your bank account.
If you owe more than $50,000, the IRS wants you to file financial information with them so they can see what your assets are and what your income is.
With an installment agreement the IRS is not interested in being a bank. With a normal bank loan you have to fill out a bank application and people have to bless the deal. Here, if you owe money to the IRS, you didn’t fill out a bank loan, you didn’t ask for permission, the IRS is not happy to be the bank in this situation.
Now, the term of an installment agreement can be five years or it can be seven years. The seven years is where the IRS wants their money on a direct debit basis. Let’s say you owe $25,000 to the IRS. The five year program would cost you about $521 a month for five years. If you owe $50,000 to the IRS, the seven year program runs right around $800 a month.
If you can’t pay the liability in full and you’re interested in an installment agreement, call us we can help. Call us at 877-4-IRS-LAW to talk to a lawyer today.