Tax Tip of the Week
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Cut a deal with the IRS
For the week of
April 9, 2001
If you can't pay the entire balance due on your 2001 income tax return, you may
be able to work out a monthly payment plan with the IRS to avoid its other collection efforts.
The IRS must automatically accept your installment payment request if you owe less than $10,000 and you agree to
pay off the balance within three years. However, the IRS will generally accept a payment plan for balances up to
$25,000 if you agree to pay off the balance within five years.
You must also meet these tests:
- During the past five years, you've filed all your income tax returns and paid all
taxes due.
- During the past five years, you haven't entered into another IRS installment agreement.
- Based on certain financial information you are required to submit to them, the IRS determines that you cannot pay your taxes in full with your income tax return.
The IRS charges a small fee to set up the plan, and you must pay interest and late
payment penalties on the balance due. Still, these costs may be less than charging the balance on your high-interest
credit card.
If you have questions about installment agreements, give us a call. We can
help you apply for an installment agreement and set up a financial plan to keep you on track in the future.
Click here to view previous tax tips.
"Tax Tips" are published weekly to
provide useful tax information. Return to this site every week for helpful tax-cutting suggestions, tax reminders,
and current tax information.
The information contained in this site is of a general nature and should not be acted upon in your specific situation
without further details and/or professional assistance.
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