- Payment Plans:
- Short-Term Payment Plan: You can request a short-term payment plan (up to 180 days) to pay off your balance.
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- This is a simple option to set up online if your combined tax, penalties, and interest are less than $100,000.
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- No setup fee is typically required for online applications.
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- Penalties and interest will continue to accrue until the debt is paid in full.
- Long-Term Payment Plan (Installment Agreement): Allows for monthly payments over an extended period (up to 72 months).
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- Streamlined Installment Agreement (SLIA): If you owe $50,000 or less, you can apply online for an expedited approval without extensive financial disclosure.
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- Non-Streamlined Installment Agreement (NSIA): If you owe between $50,000 and $100,000, you can still apply for a payment plan, but you cannot apply online and may need to submit a Collection Information Statement (Form 433-F).
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- Setup fees apply for Installment Agreements.
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- The IRS may require direct debit payments for balances between $25,000 and $50,000.
- Offer in Compromise (OIC):
- Allows eligible taxpayers to settle their tax debt for less than the full amount owed.
- Requires proving financial hardship to qualify.
- Must be compliant with current tax filings to be considered.
- Approval depends on factors like ability to pay, income, expenses, and asset equity.
- The IRS has an Offer in Compromise Pre-Qualifier tool to help determine eligibility.
- Temporarily Delaying Collection:
- If you can’t afford to pay due to your financial condition, you can request a temporary delay of collection.
- Penalties and interest will continue to accrue.
- Other Relief Options:
- Partial Payment Installment Agreement (PPIA): For those who cannot afford minimum monthly payments on a standard installment agreement.
- Currently Not Collectible (CNC) status: Allows for temporary pause of collection actions if you demonstrate financial hardship.
- Penalty Abatement: Potential relief from penalties for specific tax years or situations.
- Innocent Spouse Relief: May be available if your tax liability is solely due to your spouse’s actions without your knowledge.
Important Considerations:
- File your tax returns: Even if you can’t pay, filing prevents failure-to-file penalties.
- Communicate with the IRS: Being proactive and discussing your options can help avoid unwanted collection actions.
- Seek professional help: A tax professional can help you navigate these options and determine the best course of action for your situation.
Note: If you owe over $50,000, setting up a payment plan typically requires providing detailed financial information to the IRS.
