Abboud Tax Law

When faced with a tax bill that you can’t pay in full, the IRS offers several payment plans and options designed to make repayment manageable. Whether you’re an individual taxpayer or a business owner, understanding these options can help you avoid penalties, reduce stress, and potentially minimize interest on your outstanding balance.

• What It Is: This plan is ideal for taxpayers who can pay their balance in full within 120 days (about four months).
• Who Qualifies: Available for individuals and businesses with a combined tax, penalty, and interest balance of less than $100,000.
• Application Process: You can apply online, by phone, mail, or in person.
• Fees: No setup fee, but interest and late-payment penalties continue to accrue until the balance is paid in full.

• What It Is: For taxpayers who need more than 120 days to pay, a long-term installment agreement allows you to make monthly payments over several years.
• Who Qualifies: Generally available for individuals who owe $50,000 or less in combined tax, penalties, and interest. Businesses can apply if they owe $25,000 or less.
• Application Process: Apply online for balances under $50,000, or submit Form 9465 (Installment Agreement Request) by mail.
• Fees: There is a setup fee, which can range from $31 (if you choose automatic withdrawals) to $149 for a non-direct debit plan. Low-income taxpayers may qualify for reduced fees.

• What It Is: The Offer in Compromise program allows taxpayers to settle their tax debt for less than the full amount owed if paying in full would create financial hardship.
• Who Qualifies: Taxpayers must demonstrate that they are unable to pay the full tax liability due to economic circumstances. Eligibility is assessed based on income, expenses, and asset equity.
• Application Process: Submit Form 656 (Offer in Compromise) along with an application fee and initial payment. The IRS reviews the application thoroughly and may negotiate the amount based on your financial situation.
• Fees: Application fees and a partial payment are required, but these may be waived for qualified low-income applicants.

• What It Is: If paying your tax debt would prevent you from meeting basic living expenses, you may qualify for "Currently Not Collectible" (CNC) status. This temporarily halts IRS collection efforts.
• Who Qualifies: Taxpayers must prove that they cannot afford to pay their tax debt due to financial hardship.
• Application Process: Contact the IRS directly to request CNC status and provide documentation of your income and living expenses.
• Fees: No fees are associated with requesting CNC status, though interest and penalties continue to accrue during this period.

• What It Is: A Partial Payment Installment Agreement allows you to pay less than the full amount owed over time.
• Who Qualifies: This option is available to taxpayers who can only afford partial payments and may not qualify for a full installment plan.
• Application Process: Apply by submitting Form 9465 and additional financial documentation to demonstrate inability to pay the full debt.
• Fees: Similar to long-term installment agreements, with interest continuing to accrue.

• The IRS offers flexibility for monthly payments, including:
  • Direct Debit Installment Agreements (DDIA): Automatic payments from your bank account, which have lower setup fees.
  • Payroll Deduction Installment Agreements: Payments directly deducted from your wages, set up in coordination with your employer.
  • Manual Payments: Pay by check, money order, or online, though this method typically incurs higher setup fees.

• Interest and Penalties: Most payment plans incur ongoing interest and penalties until the full amount is paid, so it's advisable to pay as much as possible up front.
• Avoiding Collection Actions: Enrolling in a payment plan helps you avoid IRS liens, levies, and garnishments, as long as you comply with the terms of the agreement.
• Improving Financial Health: Payment plans help you regain control over your finances and prevent escalation to enforced collection actions.

Navigating IRS payment plans and options can be complex. As a tax attorney, I can help assess your financial situation, guide you in selecting the most beneficial option, and manage the application process for you. Contact me to discuss your tax challenges and explore strategies to resolve your debt efficiently.