Installment Agreements

When you have the ability to pay your tax liability the IRS will stop collection action if you enter into an Installment Agreement.  In order to set up an Installment Agreement you must be current with all of your tax obligations.  All tax returns must be filed and you must be current with your estimated tax payments, if required.

In order to set up a regular or Partial Payment Installment Agreement, you must submit a complete financial statement.  The IRS will review your financial statement to determine the amount of your excess income every month, after you have paid your necessary living expenses.  This amount is the monthly payment you are required to pay towards your tax liability every month in an Installment Agreement.  The IRS has procedures in place to determine what constitutes your necessary living expenses but there is room for interpretation.  Many times the IRS' determination of your necessary living expenses differs greatly from what  you believe you need.  This is where you would benefit from hiring an experienced tax attorney to negotiate your monthly payment.   Once you have submitted a financial statement, you have given the IRS a blueprint to levy your bank account, garnish your wages, or seize your assets.

If you owe under $50,000 and can pay your liability in full within 72 months you are eligible for a Streamlined Installment Agreement.  The IRS does not require you to complete a financial statement in order to set up a Streamlined Installment Agreement.

10 Tips to Avoid an IRS Audit

This is a list of the best ways to avoid an IRS Audit:

1Double check for math errors: Making mathematical errors is one way to trigger an audit...

2Follow the directions on the forms, fill out all required spaces, and make sure your entries are legible: When filling out your return it is better to put in a zero or a dash mark...

3Be careful if you claim the home office deduction: The IRS has found that some taxpayers that claim the home office deduction tend to inflate their deductions...