An installment agreement is a tool that can be used by taxpayers if they are unable to pay off their tax debt with a lump sum payment. Other than a Notice of Federal Tax Lien, the IRS is prohibited from taking any form of collection action against the taxpayer whenever the installment agreement is pending or has already taken effect. Types of collection action prohibited include bank levy, wage garnishment, and seizure of property. The installment agreement may also be used with state tax authorities.

If a taxpayer owes between $25,000-$50,000, they are not required to provide a financial collection information statement (Form 433-A or Form 433-F). The IRS will allow the taxpayer to set up a streamlined installment agreement, but only if the payments are made through direct debit. Additionally, the taxpayer has the option to pay off their tax debt if they are able to do so within 72 months.

The amount determined for an installment agreement depends on the taxpayer’s ability to pay and the IRS’s review of the collection information statement. In regards to the expenses listed on these forms, the IRS has computed national and local standards. Because the average taxpayer is not adept with the Internal Revenue Manual, IRS collection personnel will attempt to persuade the taxpayer that certain expenditures are not allowed. This results in the taxpayer left with a monthly payment they truly cannot afford. As your seasoned tax attorney, Nicholas Frey can ensure your installment agreement is something you can actually afford.

Frey Law Firm can guide you through the complicated information statement forms. If a taxpayer owes less than $25,000, they can set up an installment agreement through the IRS’s website or by calling the number on the IRS notice.

If you are facing tax issues, Our Firm is Your Solution. Frey Law Firm is here to help you under the guidance of Nicholas Frey. Contact us today for your free initial consultation.