Wednesday, September 10, 2008

The “Easy” Payment Plan

In the previous blog, I talked about the 21 resolutions available to a U.S. taxpayer. The resolution that the IRS offers most often is a payment plan, or Installment Agreement (IA). In the past, the IRS would offer a taxpayer a 60 month payment term to pay off their tax debt, but the IRS is changing their policies on this.

It used to be that a taxpayer could get into an “IA” without going through a full financial analysis with the IRS, and disclosing all of their assets, incomes, and available lines of credit. The collection agents at the IRS have begun a process of requesting a 433-F from everyone requesting to be placed into an “IA”. By doing this, the IRS can explore every option that you have available when it comes to paying off your debt in full immediately, even if via credit cards or an equity loan.

There are two things you must remember when dealing with the IRS collections department. The first is that it is their job to collect, and to collect quickly. Secondly, the IRS believes they are more important than ANY other creditor, so they will be happy to put you in debt to someone else, as long as you’re not in debt to them. Having a taxpayer submit a 433-F also allows the IRS to see your income and your expenses. They will give you the “national standard” for your available Monthly Disposable Income (MDI).

When the IRS discovers your “MDI”, they will request that the entire amount become your monthly payment.

So, what should you do now that the IRS is making you negotiate to even get a payment plan? Your best option is to hire a Professional Negotiator within the IRS. As I have covered before, there are former IRS agents who are now Enrolled Agents and know what your rights are within the IRM. These professionals can get you into the BEST possible resolution, for you, within the tax law.