What is it all about?
Tax Payment or perhaps the tax rescue plan is a very important thing to know about it. As its name confirms, it is something related to the tax. In this article, we are going to it more. However, our focus is towards the federal taxes and in the America, a body known as the IRS collects all Federal taxes. In case if you are a salaried person than you may not have encountered the IRS too often. However those who are self-employed or running sort of a business need to maintain a frequent contact with the IRS.
What are Tax Debt and Tax Payment Plan?
Tax debt in the simplest terms is that amount that you have to pay within a defined period. If you are paying your taxes on time, then there is no problem at all. While contrarily to this in case you are persistently failing in paying your tax dues, then your tax debt is growing more and more. The addition of penalties makes it more difficult to control tax debt. There is a possibility of having your debt grow from pennies to dollars within a few months. The Tax payment plan becomes a hope in such cases. It is an option provided by the IRS for individuals and business with a significant tax debt.
What are the Consequences of not paying?
When it comes to the consequences, they are devastating. The IRS have the mandate to recover all their money that you owe to a period of ten years. Afterward, they can legally sue you as a defaulter. Most of the options that they use are similar to that which is being used by commercial banks. The consequences, however, are devastating. An individual may lose his home, his car, and other personal belongings. Such a proceeding against you is going to hit your credit history quite badly.
If I am eligible to opt for a tax payment plan?
Unfortunately, this facility is limited to a certain group of taxpayers and in case if you are the one who matches their criteria then yes. As of today, the IRS stated criteria that make you eligible for online processing is as follows
For individuals, the upper limit of tax debt is set at $50,000
For businesses total tax debt should be equal to or less than $25,000
In both cases, the amount mentioned represents the overall debt that includes penalties and interests as well
In both cases, it is mandatory that the requestors have never missed filing of a return
How can I apply?
As we have mentioned above, one can easily apply for taking advantage of a tax payment plan through the internet. However, in case if you do not meet the criteria mentioned above then there is an alternate manual method available. What you all need is to download the Form-9465 (Installment Agreement Request Form), fill it and mail it to the address provided by IRS.
What are the Chances?
The chance of getting through depends highly on your case. While keeping an eye on the previous history, we can conclude that IRS facilitates those whom tax debt is greater than $25 and less than $50 thousand dollars. A big factor that can affect their decision is your current financial capacity. In case if they believe that an applicant can pay off all his tax debt at once, then they will not provide you with this facility.
Should I Hire a Professional?
Definitely yes! Especially when it comes to the IRS and you engaged to resolve a matter different from general everyday tasks. A trained professional with the required expertise can put your case in a more effective way.
What should I look for in a pro?
Apart from the general check, do not forget to check their history and experience for similar kind of work. When it comes to the professionals, it is always good to hire one with one of the IRS recognized credentials at least. Remember, tax payment plan perhaps is the last option for you.