The IRS Installment Agreement

Most open IRS cases are closed in one of two ways, via a hardship or an installment agreement. How does the IRS determine how they are going to close your case?  By simply taking a Form 443-A or Form 433-F financial statement from you, the taxpayer. Based on that financial statement and the documentation that goes along with that statement, the IRS will make a determination on your case.

If your case does not fall under the hardship rules, the installment agreement will be a payment plan that allows you to pay over a period of time. The IRS has the right to review the payment agreement from time to time, but most agreements end with the statute of limitations expiring on the case. So, unless your AGI (Adjusted Gross Income) increases significantly, these cases will die slowly throughout the years of the statute.

Why it is important to get a payment agreement as soon as possible:

1. It stops collection action against you for a long period of time;
2. It allows you to make affordable monthly payment to the IRS;
3. It gets your life back in order without the threat of IRS collection;
4. The IRS will release any levy they filed during the time they were working your case.

The IRS offers two types of installment agreements, streamlined and long term. After that, the Revenue Officer Agreement comes into play.

The Streamline Agreement

The streamline agreement can be obtained quickly. The rules for the streamline agreement come into play if the tax due is under $25,000, including all penalties and interest. You must have all your tax returns filed and have current withholding tax taken out or estimated tax paid. Under the streamline agreement the balance must be paid within 60 months or before the statute of limitation ends. Fresh Start Tax can get these cases resolved immediately. We can usually get a streamline process set-up within a one hour time period. One benefit of a streamline agreement is that no  financial statement is required.

The Long Term Agreement

The long term agreement has several names, installment agreement or part pay agreement are the most common.  The IRS requires a completed Form 433-A or Form 433-F, financial statement, depending on which division is working the case. The ACS unit requires a 433-F and the local or high dollar unit requires a 433-A. These cases are looked over more carefully and require a lot of documentation. The IRS will require bank statements, pay stubs, copies of all bills and possibly even cancelled checks. The IRS will also follow the National Standards Program which allows a limited amount of expenses per category. It is not recommended that you begin this process yourself with the IRS. It can be difficult to determine what they allow and what they do not. A professional can negotiate a better deal. The key to getting a good part pay agreement is packaging. At Fresh Start Tax we are the best at handling this process.

Revenue Officer Agreement

Should your case not be closed by the Automated Collection System, your case will head out to the local field branch of the IRS. A Revenue Officer is assigned the case. Their job, if it involves  an installment agreement, is to secure a 433-A, a very long detailed financial statement complete with all documentation. If it gets to this point, you want IRS representation by trained professionals or you will be taken to the cleaners.

Fresh Start Tax is here for you.

Related posts:

1. The IRS Charges a Fee For Installment Agreements.