This is the last part of a three part series of blogs on IRS payment arrangements. While most taxpayers utilize an installment agreement to pay their tax debt, other payment arrangements exist for taxpayers to utilize in the settlement of their outstanding tax debt. Here are some other types of arrangements that are useful in paying delinquent taxes:
Currently not collectible (CNC) status
The IRS may place a taxpayer’s account in currently not collectible status. If a taxpayer owes more than $10,000, the IRS will file a tax lien, but it will cease collection activity. CNC is a temporary status which the IRS regularly reevaluates, usually on an annual basis.
Short-term extensions
No setup fee is required for a short term extension, which results in taxpayers paying less in penalties and interests, in contrast to installment agreements. The IRS may grant up to 120 days to pay a liability in full.
Hardship extension
As part of the IRS’s Fresh Start initiative, individuals that qualify may request a longer extension of time while having late-payment penalties waived.
Offer in compromise (OIC)
This arrangement is a long arduous process which rarely results in approval, mainly because it allows taxpayers to settle their debt for less than the amount owed. An OIC is usually approved if the offer represents the largest sum of money it may expect to collect from the taxpayer within a reasonable period of time.
In-Business Trust Fund Express Installment Agreement
Small businesses that currently employ at least one person may qualify for an In-Business Trust Fund Express Installment Agreement. These installment agreements generally do not require a financial statement or financial verification as part of the application process. A small business must owe $25,000 or less at the time the agreement is established. If more than $25,000 is owed, the liability must be reduced before any agreement is entered in order to qualify. The debt must be full paid within 24-months or prior to the Collection Statute Expiration Date (CSED), whichever is sooner. Payment must be made pursuant to a Direct Debit installment agreement (DDIA) if the amount owed is between $10,000 and $25,000. Finally, the small business must be compliant with all other filing and payment requirements.
If you owe back taxes, do not procrastinate any longer, take advantage of the available payment arrangements offered by the IRS to settle your tax debt, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation, call 212-490-0704.
