Balance Due on Irs Installment Agreement

If you owe taxes to the IRS, you may be relieved to find out that you can set up an installment agreement to pay the balance over time. This allows you to avoid collection actions such as garnishments or levies, as long as you stay current on your payments. However, it`s important to know what happens if you miss a payment or can`t pay the full amount due each month.

First, let`s review how installment agreements work. Once your tax liability is assessed, you can request a monthly payment plan online, by phone, or by mail. Depending on how much you owe and how long you need to pay it off, you may have to provide financial information to determine your ability to pay. The IRS charges a fee for setting up the agreement, which varies depending on how you apply and how you make your payments.

Once you`re accepted into the program, you`ll receive a notice confirming your payment amount and due date each month. You can choose to pay by direct debit from your bank account, payroll deduction, or by mailing a check or money order. You`re required to make a payment by the due date each month, even if you`re requesting a change in your payment amount or due date. Failure to make a payment could result in defaulting on your agreement.

If you miss a payment, the IRS will send you a reminder notice. You have 30 days to make the payment before the agreement is considered in default. If you can`t pay the full amount due, you can request a partial payment installment agreement or an offer in compromise, which lets you settle your tax debt for less than what you owe. However, both of these options require you to provide detailed financial information and may take longer to process.

If you default on your installment agreement, the IRS may file a Notice of Federal Tax Lien against your property, which can affect your credit score and ability to obtain credit. They may also take collection actions such as garnishing your wages, seizing your bank accounts, or levying your assets. Additionally, interest and penalties will continue to accrue on the balance due until it`s paid in full.

In summary, setting up an installment agreement with the IRS can be a helpful way to pay off your tax debt over time. However, it`s important to make your payments on time and in full to avoid defaulting on the agreement. If you can`t make a payment or need to change your payment amount or due date, contact the IRS as soon as possible to discuss your options. By staying current on your payments, you can avoid collection actions and reduce the overall cost of your tax debt.

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