television long enough and you’ll eventually find someone touting their ability to solve debts for “pennies on the dollar.” Pay very close attention (and get out a magnifying glass) and you’ll also find the fine-print disclaimer stating that such results are unusual and not to be expe.  Although settling a $50,000 debt for $2,500 is a professional’s occasional pleasure, such ruions in liability are more often the result of correing payer, third- party, and/or IRS errors rather than heat negotiation.

The IRS has, however, made some meaningful changes to ease the burden on those owing back-es.  Today, I will discuss recent changes made to IRS installment agreement by the IRS’s Fresh Initiative program – the IRS’s attempt to help delinquent payers pay their es while navigating y economy.  I will also highlight two of the tools professionals use to help payers pay and ruce their debts: the Offer in Compromise and the Partial Payment Installment Arrangement.

Installment Agreements Made Easier: In early 202 the IRS increas the upper limit for payers who will qualify for the Streamlin Installment Agreements Program from $25,000 to $50,000.  It also add a full year for qualifying participants to pay their back-es by increasing the maximum repayment period from 60 to months.  Although the liability threshold and repayment period have increas, certain requirements must be met to qualify. These requirements vary bas on the amount of back-es ow

Debt $0,000 or Less: Generally, individual payers requeng an installment agreement will not be turn down if they: ) Owe less than $0,000, 2) Have fil their returns on time and paid all es due for the previous five years, 3) Agree to pay their debt in full within three years, and 4) The IRS agrees they ne additional time to pay. 

Debt $25,000 or Less: Those who owe $25,000 or less in back-es and do not qualify for a “guarante” installment agreement may qualify for the Streamlin Installment Agreement.  The agreement is request by completing Form 9465.  If accept it will ve payers up to months to pay their back es.  Although this request can be refus by the IRS, it will generally be accept if all returns have been fil and the payer has not default on a previous agreement.

Debt $25,000 to $50,000: The changes mention above have made it possible for those owing from $25,000 up to $50,000 to also qualify for a Streamlin Installment Agreement.  Although applying is a bit more complex for those who owe this amount of back-es, it is much simpler than before and will also ve payers months to pay their es. 
Debt Greater than $50,000:  Those owing this amount of back es were not largely affe by Fresh Initiative.  Although the process seems to run a little smoother, these payers will ll ne to supply a fair amount of financial information to the IRS on forms 433-A or 433-F unless they can pay their debt to below the $50,000 threshhold. 

Offer in Compromise: An Offer in Compromise (OIC) occurs when a payer offers less than total due to settle a deficiency.  It is a valuable tool for the Professional but successful OIC are relatively rare.  Although the IRS criterion for an acceptable offer was made less stringent (and significantly less expensive for those who can fully pay the offer within 24 months of acceptance) by the Fresh Initiative, the criterion remains fairly narrow.  So narrow, in fa that, bas on raw historical data, only about 27% of OICs have been accept by the IRS over recent years.  OICs can also take many months to craft, submit, and guide through the application process.  As a result, one of the primary tasks of the professional is to determine which payers will make successful Offer in Compromise candidates.

Partial Payment Installment Agreement: A third tool Professionals have to help payers is call the Partial Payment Installment Agreement (PPIA). The PPIA contains aspes of both the Installment Agreement and the Offer in Compromise.  Like an Installment Agreement, an agre-upon payment amount is made each month.  But, these payments are only made until the ten-year colleion statute expires.  Any balance remaining after the statute has expir is extinguish as uncolleible. 

Today I have discuss recent changes made to the IRS installment agreement program and shar two other available to payers who owe back es.  I did not, however, discuss many of the requirements and limitations of these or any other faors that may influence your situation or payment strategy.  As always, remember that this (or any) article does NOT contute advice.  If you have queons or ne assistance, please feel free to conta our office for more information.

amzn_assoc_placement = “adunit0”;
amzn_assoc_enable_interest_ads = “true”;
amzn_assoc_tracking_id = “acallresite-20”;
amzn_assoc_ad_mode = “auto”;
amzn_assoc_ad_type = “smart”;
amzn_assoc_marketplace = “amazon”;
amzn_assoc_reon = “US”;
amzn_assoc_linkid = “0358b9be20242b95628fb5fe5ad2ab”;
amzn_assoc_fallback_mode = {“type”:”search”,”value”:”Today Deals”};
amzn_assoc_default_category = “All”;
amzn_assoc_emphasize_categories = “064954”;

6 thoughts on “Fresh Start for Tax Debtors”

Leave a Reply