Understanding Your Options: Navigating the Different Types of IRS Payment Plans
If you’re facing a tax debt that you’re unable to pay in full, don’t panic – there are several options available to help you manage your debt. The Internal Revenue Service (IRS) offers several types of payment plans to help taxpayers who are struggling to pay their tax bills.
Here’s a look at some of the most common payment plans offered by the IRS:
Short-Term Payment Plan (Due in 120 Days or Less)
If you’re able to pay your tax debt in full within 120 days, you can apply for a short-term payment plan. This option allows you to pay your debt in full without incurring additional fees. However, interest and penalties will continue to accrue on your debt until it’s paid in full.
Long-Term Payment Plan (Installment Agreement)
If you’re unable to pay your tax debt in full within 120 days, you can apply for a long-term payment plan. This option allows you to pay your debt over a longer period of time, typically in monthly installments. There is a fee to set up this type of plan, and you will also be charged interest on the outstanding balance.
Partial Payment Installment Agreement
Currently Not Collectible Status
Offer in Compromise
If you’re struggling to pay your tax bill, it’s important to act promptly and contact the IRS to discuss your options. The IRS provides several resources to help you understand your payment options, including their website, toll-free telephone number, and local offices.
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Karla Navarro, EA, CTRC
Founder and principal Enrolled Agent at My Tax Problems Solved. Karla brings a deep well of expertise and a commitment to precision in tax representation to the team.
