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IRS is simplifying the process of getting a repayment agreement

| Nov 16, 2020 | Federal And State Tax Collections |

Especially this year, many taxpayers are facing challenges paying their tax bills. If the pandemic has affected your ability to pay, the IRS has your back, according to a recent announcement. At least, the agency is making it easier to settle up.

Taxpayers have always had options for repayment, such as:

  • Short-term repayment plans
  • Long-term repayment plans
  • Installment agreements
  • Offers in compromise

The pandemic, however, has made it difficult for some people to meet their obligations under these plans. There is now a new IRS Taxpayer Relief Initiative that has expanded on these options or reduced the burden of them. Here are some highlights:

  • If you qualify for a short-term repayment plan, you may now take 180 days instead of 120 days to pay your tax debt.
  • If you have an accepted offer in compromise but are temporarily unable to meet the payment terms, the IRS is offering additional flexibility to the terms.
  • If you have an existing installment agreement, the IRS will automatically add any new tax debts to that agreement instead of defaulting the agreement.
  • If you are an individual taxpayer who owes less than $250,000, you may be allowed to set up an installment agreement without the financial substantiation that your proposal is sufficient.
  • If you are an individual taxpayer who owes only for the 2019 tax year and owes less than $250,000, you may qualify to set up an installment agreement without waiting for the IRS to notify you of a federal tax lien.
  • If you have an existing Direct Debit Installment Agreement, you may now be allowed to use the Online Payment Agreement system to propose a lower monthly payment and/or change your due dates.
  • Certain taxpayers may be allowed to extend their short-term repayment plans from 120 to 180 days.

In addition to the options above, the IRS also may allow:

  • A temporary delay in collections
  • Relief from penalties with reasonable cause
  • First-time penalty abatement relief

If you owe a tax debt, you can apply for assistance directly at IRS.gov. However, if you owe a substantial amount, you may want to talk to a tax attorney to argue for the most favorable treatment.

Don’t be silent about a tax debt you can’t pay. The IRS does have options available that could help you.