New name, new threshold…
Under the old guidelines, there was absolutely no need to submit financial documents to get the installment agreement in place. Overall, this meant that the payment would come to about $500 a month. It would take a few years, but you'd have erased your liability when it was all said and done.
The installment agreement comes bundled under a new name – the IRS Fresh Start Program. The change in the guidelines is actually a nice little bump for those suffering from the scourge of unpaid back taxes. Effective immediately, the threshold for installment agreements has been bumped to $50,000 from the $25,000 it stood at previously. This means that individuals who fall into the new bracket are able to enter into an installment agreement without having to submit any financial documents. Not bad, huh? But wait, there's more! If the individual requesting the installment agreement has limited financials, they can also see the agreement period increase from five years to six overall, giving them a bit more time to pay off what they owe.
…but the same old tricks
At this point, you should probably be thinking to yourself that this seems pretty positive overall. For the most part, you're right. Raising the bar for what mandates submitted financials is a really nice perk. But, as with everything the IRS says and does, I'm cautious.
I hate to be the bearer of bad news, but it's imperative to realize that the IRS is not your friend. The IRS Agent you're speaking with is not (99.9/100 times) looking out for your best interests. We've seen a whole lot of people call the IRS and be won over by the friendliness of the IRS Agent they've spoken with. It's not uncommon that an IRS agent will advise a taxpayer to borrow enough money to cut down their debt, hit the $50,000 threshold, and enter into the magical Fresh Start Installment Agreement (which, in reality, doesn't make that huge of a difference).
Just because the IRS seems friendly doesn't mean the IRS is friendly.
Now trouble comes knocking. You've liquidated funds that can have a tax implication and they're going to land you with a tax bill. Once that tax bill hits, seeing as you no longer have funds available, there's a very real possibility that you might default on your freshly minted IRS Fresh Start Program Installment Agreement. This is how the IRS can bait people into losing all their bargaining chips. If you have a default on your installment agreement, it's going to make it much more difficult to enter into another proposal.
It's possible that entering into an IRS Fresh Start Program Installment Agreement is right for you, but just make sure that you've gotten all the information you need. That's priority #1. There are other options. If you need assistance deciding which program is right for you, contact us. We can help. Call us at 888-727-8796 or email email@example.com.