The IRS wants your money. And when you can't afford to pay your tax liability in full, they're willing to take what they can get. That is why things like an Offer in Compromise and Installment Agreements were created. The IRS realized they can't get blood from a stone, but they can get something from that stone.
An Installment Agreement can actually be very beneficial to someone that owes money to the IRS but has fallen on hard times. It's a program that lets taxpayers pay their tax debt in monthly payments; either for the full amount owed, or a partial amount.
Beneficial? Yes. Easy to get into a good agreement? Not exactly. First of all, you have to be current with your tax return filing. Secondly, many times you have to be prepared to tell the IRS your financial story in a light that shows you really can't afford to pay much. It's not just a simple case of filling out a form. We actually had a case where the IRS tried to tell us that our client's cancer medicine couldn't be written off in her expenses (we appealed that and won).
The good news?
The IRS recently announced that they are testing expanded criteria for streamlined processing of taxpayer requests for Installment Agreements. During this test, "more" taxpayers will qualify to have their installment agreement request processed in a streamlined manner. I was pretty stoked that it seemed like they were trying to make things easier for taxpayers.
Then I looked more into the details of the announcement.
One expanded criterion being tested is this: Individual taxpayers with an assessed balance of tax, penalty and interest between $50,000 and $100,000 may experience accelerated processing of their Installment Agreement request. This will occur if the taxpayers' proposed monthly payment is the greater of their total assessed balance divided by 84 – or – the amount necessary to fully satisfy the liability by the Collection Statute Expiration Date.
"During the test, expanded criteria for streamlined processing will be applied to Installment Agreement requests submitted to Small Business/Self Employed Campus Collection Operations, this includes the Automated Collection System (ACS). Expanded criteria will not be applied to installment agreement requests submitted to Wage & Income Accounts Management, SB/SE Field Collection or through the Online Payment Agreement application. More information on the expanded test criteria will be made available in the coming weeks. In the interim, IRS employees in Campus Collection/ACS can assist with any installment agreement requests."
My excitement started to fade when I read the "Please note" addition at the bottom of the announcement. It says:
"Please note: Under existing criteria, approximately 90 percent of individual taxpayers with a balance due qualify to use the IRS’s Online Payment Agreement application. IRS encourages individual taxpayers to use the online application and increase their convenience by electing the direct debit method of payment."
Okay. So what you're saying is that this great new streamlined processing doesn't apply to requests submitted through the Online Payment Agreement application, but 90% of taxpayers qualify to use the Online Payment Agreement. So this program will help 10% of taxpayers.
At least it's a start. Maybe?
If you have a tax debt and want to discuss your options for ending the headache once and for all, contact us to schedule a free, confidential consultation. Call us at 888-727-8796 or email email@example.com.