Atlanta CPA Teaches How to use an IRS Installment Plan
Atlanta CPA Teaches How to use an IRS Installment Plan
When you are in the middle of addressing IRS tax issues and trying to evaluate between an Offer of Compromise or an Installment plan, frequently the options look bleak, as often they are. However there is good news for those who are desirous to look “outside the box” in looking to solve your IRS tax problems. Knowing the ins and outs of varying programs will do much to help you know what is in your best interest.
An IRS Installment plan is essentially a long range, but frequently the most convenient to solve an IRS tax bill short term. However this option is frequently the worst option as interest and penalties continue to be assessed thus ensuring that you continue to owe even more additional monies rather than less. Form 9465 is used by taxpayers with the IRS to make an Installment Agreement Request to set up a monthly payment plan. If it all possible it is recommended that before you set up an installment plan that you look to other options available such as a loan from a bank.
If you owe the Internal Revenue Service less than $10,000 there is an option called a Guaranteed Installment Agreement. In general terms to qualify for this you have to have timely filed and paid all income tax returns for the last five years and have not used an installment agreement during this period.
If you owe the IRS more than $10,000 then the plan is still available but the IRS may request additional information to determine and validate that you are not able to pay the present amount owed in full. As part of the Installment rules for all levels of IRS debt, the IRS expects you to file and pay all future tax filings on a timely basis. Failure to do so will immediately invalidate your Installment Agreement allowing the IRS to use liens, levies, and garnishments to effect and force collection. Typically to protect its financial interest in an Installment agreement the IRS will file a general lien necessitating taxpayers to get permission from the IRS in advance to either refinance or sale assets. Also, please note that the IRS will apply all monies as they see fit allowing dollars to be first applied to penalties and interest leaving the principal balance potentially unchanged.
Installment agreements are problematic because frequently there may be better options such as:
-Paying the tax and interest in full. Frequently if you can do this and have valid reasons or explanations as to why the monies in arrears, the IRS will abate assessed penalties.
-Reviewing old returns. Often I have worked with taxpayers to determine that original returns were either nor filed, filed incorrectly or that valid deductions were originally left off the filed returns.
-An Offer in Compromise. If you qualify the IRS will reduce your tax bill to a combination of your net worth and your “excess cash flows” over the next five years.
Representing yourself before the IRS is a recipe for disaster. Sitting down with a CPA who is well versed in tax representation issues is your best first step to getting back tax issues, payments and returns filed and paid. Finding the right solution to your tax problem can solve your tax problem better and faster than not. Though an Installment Agreement is often the most convenient it often results in both prolonging the problem and the most financial outlay.
John Dillard is a Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304.
“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!”
What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31
Why are these verses here? Learn how HIS CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html
We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Bookkeeping.
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