The tax professionals at Tax Defense Network make sure that clients are always fully informed about their options before they make a decision about resolving tax debt. When making a decision between installment plans, there are many things to consider.
“Installment plans are the most common type of tax resolution we arrange for our clients,” says Kay Wolfson of Business Development at Tax Defense Network. “There are various different types of installment plans, and we assist our clients in choosing whichever is best for their particular situation.”
The Streamlined Installment Agreement is traditionally for tax debts $25,000 and under, but the IRS has expanded it to include tax debts of $25,000 to $50,000 with certain conditions. The main benefit of the Streamlined Installment Agreement is that no financial disclosure is required. This is important because what the IRS does not know a taxpayer has, they cannot levy or seize; full financial privacy is maintained including income, expenses, assets, and spending habits.
In a Streamlined Installment Agreement, the taxpayer agrees to pay the entire debt amount. Payments are calculated by dividing the debt amount by the number of months given to pay it off, up to a maximum of 72 months. Since no financial information is submitted, no consideration is given to the taxpayer’s ability to pay the amount.
Conversely, in a Partial Payment Installment Agreement taxpayers agree to pay an affordable monthly payment, the amount based on their financial situation. This monthly payment is made until the statute of limitations on the debt ends, resulting in an overall tax debt reduction because even though the debt is not fully paid, the IRS can no longer collect on the debt.
Unlike a Streamlined Installment Agreement, a Partial Payment Installment Agreement requires full financial disclosure. The IRS examines a taxpayer’s ability to pay by looking at their income, expenses, and assets, including back accounts, retirement savings, and property. The IRS requires taxpayers to pay down their debt with any liquid assets.
“Both agreements have pros and cons,” continues Kay at Tax Defense Network. “Streamlined Installment Agreements are great because you can protect your savings and keep the IRS out of your business, but you have to pay the entire debt. With a Partial Payment Installment Agreement, tax debt reduction comes at the price of full financial disclosure.”
Tax Defense Network is a national tax debt resolution company with a team of licensed tax professionals, enrolled agents, and CPAs. A+ rated by the Better Business Bureau, Tax Defense Network has helped almost 100,000 clients, including individuals and small businesses, with their tax problems.