Entering into an Installment Plan Agreement with the IRS or with a state taxing authority is one way to pay off your back taxes. Before entering into an installment agreement, however, the pros and cons of such an agreement should be carefully weighed. For example, while the installment agreement is in effect, the interest and penalties on your tax debts continue to accrue. In addition, an installment agreement would not prevent the IRS from placing a tax lien on your property in order to collect on the tax liability. The IRS, however, is obligated to send a Notice of Intent to Lien or Levy before placing a federal tax lien on your property and beginning the process of tax levy or tax seizure including a bank account levy.
Eligibility for an installment plan agreement depends on how much is owed in taxes and on the taxpayer’s financial resources. The IRS will also consider the taxpayer’s history of compliance with tax filing and tax payment obligations. Thus, if the taxpayer has a history of delinquent tax debts or unfiled tax returns, or if the terms of a previous installment agreement were violated, it is more difficult to negotiate a new and favorable installment agreement.
The successful negotiation of a favorable installment agreement with the IRS or with a state taxing authority depends on expert knowledge of the procedures and regulations of these government agencies. If you have recently received an IRS notice of tax delinquency or a tax bill demanding full payment of your tax debt, contact Kamyar Mehdiyoun, IRS tax lawyer in Rockville, Maryland. We are a tax law firm specializing in tax dispute matters and will help you negotiate a favorable installment agreement that allows you to pay the lowest periodic payments.