November 11, 2011 by msquaredlaw

If you are currently unable to pay your taxes in full, negotiating an installment agreement with the IRS may be a viable option for you.

Taxpayers Who Owe $50,000 or Less.

Taxpayers who owe $50,000 or less in combined tax, penalties, and interest and cannot pay their tax debt in full are usually given fairly liberal payment plan options.  You will need to disclose limited financial information in order for the IRS to make a determination as to your payment amount and the number of payments.  The terms and conditions are often negotiable and you may pay a lesser amount if financial hardship can be demonstrated.  Representation by a tax attorney is recommended in order to obtain the most flexible and beneficial terms available in your specific situation.

Taxpayers Who Owe More Than $50,000.

Taxpayers who owe more than $50,000 in combined tax, penalties, and interest may still qualify for an installment agreement, but are subject to a more strict set of criteria and financial disclosure requirements.

The IRS will be very aggressive in the collection of your taxes especially if you have been unresponsive or they believe you have the ability to pay all or a large portion of your taxes immediately.   It is of no consequence to the IRS whether you have other business or personal priorities and that you fully intend to pay these taxes in the future.  Representation by a tax attorney is highly recommended to interact with these aggressive IRS agents on your behalf in order to express your financial condition in the most favorable light and protect your rights.

Modification or Termination of Installment Agreement.

IRS may modify or terminate an installment agreement if any of the following occur:

  • You miss an installment payment.
  • You fail to pay any future tax liability when it’s due.
  • You fail to provide an update of your financial condition when the IRS makes a reasonable request for you to do so.
  • The IRS determines that your financial condition has significantly changed.

The IRS must give you 30 days notice before altering, modifying or terminating the installment agreement and it must explain its reasons for the action.  However, this notice requirement does not apply when the IRS finds that the collection of the tax is in jeopardy.

If you are in danger of defaulting on your payment plan, it is imperative that you consult with a tax attorney or at the very least, contact the IRS immediately.

If you would like our assistance with negotiating an installment agreement, or would like a consultation to discuss your options, please contact us.

Muiños & Morales



  1. Chandra Bose says:

    Brilliant explanation! Have bookmarked!

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