Payment Plans for Back Taxes

Posted on 27. Jun, 2012 by in Back Tax Returns, Need to File Back Tax Returns

So, you have this avalanche of back taxes due, and you are more than a little panicked about how you are going to pay them.  While they will definitely have to be paid, the IRS is not so blind to believe that everyone can pay the entire amount immediately.   Regardless of the circumstances that put you or anyone else in the situation, they know that if they want their money they have to be flexible to a certain extent.  They offer various payment options for this very situation.

There are two differ types of payment plans offered by the IRS.  The first is a standard payment option that allows tax payers to pay equal installments each month until the debt is paid in full.  Generally this is set up to last from 3 to 5 years.  The other plan is designed for those that may not be able to pay the amount that would be due each month in a standard payment plan.  This step-up plan starts out at a lower payment each month, and the monthly payment increases over time.  The premise is that as time passes, income will increase and thus the ability to pay a higher payment will increase.

For those who have not paid their taxes on time for what the IRS deems to be “good reasons,” there is the possibility of abatement.  This is where they IRS waives the fines and interest associated with not paying the amount due on time, thus reducing the total debt.   It is very difficult to be approved for abatement, and specific criteria set by the IRS must be met.

Lastly, in very specific situations there is the possibility of an Offer in Compromise, in which the IRS accepts less than what is owed as payment in full.  This is also very difficult to have approved as well.   In the event that either abatement or an Offer in Compromise is approved, there is a payment plan available for any amount that is still owed.  Though these options are available, most will have to pay the full amount owed, and available payment plans make this much more manageable.

Do you need to file a 2009 tax return?  We are a licensed CPA firm and we can prepare tax returns in all 50 states.  Call us today at 1-888-570-1033.

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