Over the course of the next year, the Internal Revenue Service (IRS) is testing new eligibility criteria for its “streamlined” payment agreements, with the goal of making it easier for taxpayers to pay off their outstanding tax liabilities.
If you owe back taxes to the IRS, there are a number of alternatives within the IRS to settle your account. One way is to pay off your tax debt under a payment plan (referred to by the IRS as an “installment agreement”).
While the IRS generally has discretion over whether to enter into an installment agreement, it is required to enter into installment agreements for individual taxpayers if the outstanding tax liability is less than $10,000, and the taxpayer otherwise has filed his or her current tax returns, paid current taxes owed, and the taxpayer has not entered into a prior payment agreement with the IRS during the last 5 years. The payback period must be at least three years, and the taxpayer must agree to keep current with all tax reporting and payment requirements during the payment plan period.
The IRS also offers a “streamlined” installment agreement for individuals owing from $10,000 to $50,000. No financial information must be submitted to the IRS, and the payment period can be up to 72 months. Again, and with all IRS payment plans, the taxpayer must agree to file all future tax returns and pay these taxes when due during the payment plan period.
In a recent announcement, however, the IRS indicated it was testing the expansion of the streamlined payment plan program, to increase the dollar threshold (including all tax, penalties and interest) owed from $50,000 to $100,000, and to add another year to the 72-month maximum repayment period (to 84 months).
These new streamlined payment plan provisions, if adopted by the IRS, would greatly help those that wish to resolve their tax liabilities.
