Installment Agreement FAQ

By the time you find out the IRS is serious about collecting a tax debt, the amount you owe may have grown beyond your ability to repay it and still put food on the table. It’s not just the original amount owed, but penalties and interest accrue on top of that debt, and some of the penalties can be quite significant, depending upon whether your original return was timely filed, field late, or never filed. An installment agreement may be the answer to get that tax debt paid off, but there are important things you need to know before seeking out an installment agreement. See answers to frequently asked questions below, and contact Tyler, Dallas, Installment agreement lawyer Scott Scammahorn at the Scammahorn Law Firm in Dallas and Tyler for a confidential consultation regarding your tax liability.

  1. How long do I have to pay off a tax debt under an installment agreement?
  2. Installment agreement payment plans can be approved for as long as 72 months.
  3. How much will I have to pay on a monthly basis?
  4. The IRS employs a set of guidelines to determine how much they believe you have in “disposable income” after making deductions for necessary living expenses, which varies depending on how large your household is and also what region of the country you are in. The government will then expect some portion of your disposable income (or all of it) to be put towards your installment plan. Texas Installment agreement lawyer Scott Scammahorn can help ensure the IRS is determining your “necessary expenses” appropriately and not trying to take more than they should or more than you need to live on.
  5. What if my expenses are greater than the guideline amount, so there isn’t any disposable income left to go toward an install agreement?
  6. Installment agreements are not for everyone, but they are only one tool in the tax lawyer’s toolkit to help you get out from under burdensome tax debt. If you can’t afford a payment plan, there may be other options better suited for you, such as negotiating an offer in compromise or having your account placed into “Currently Not Collectible” (CNC) status.
  7. Are there any downsides to an installment agreement, assuming I qualify for one and can afford it?
  8. With any existing tax debt, interest and penalties can continue to accrue until the debt is paid off, so if you are on a six-year installment payment plan, you may find yourself paying an additional six years’ worth of penalties and interest. If you can afford a one-time payment to settle your tax debt, negotiating an offer in compromise may be a better solution. If not, the installment agreement approach may still be an effective way for you to deal with a serious legal issue and avoid further trouble, despite the penalties and interest involved.
  9. What if I dispute the amount of the tax debt the IRS says I owe?
  10. Call the Scammahorn Law Firm, PC at 903-595-1000. Our Tyler, Dallas, tax lawyer help determine if you have a bona fide dispute with the IRS and provide strong, effective representation in whatever forum required to resolve your tax matter favorably and successfully.