IRS DEBT FULL PAY GUIDANCE

OVERVIEW AND FAQ

OVERVIEW - FULL PAY IRS DEBT

When settling the debt fails, bankruptcy won’t help, and the debt is correct…paying the IRS debt in full is what’s left. If you are in this position, there are things you’ll want to understand.

MAKING SURE

If you have serious IRS debt, you won’t want to arrange a “full pay” IRS installment agreement, one that pays the debt “in full” within a certain time frame, unless you are certain that the debt is correct, that you can’t settle it for less, and that bankruptcy doesn’t make sense. There are a lot of people with serious IRS debt who struggle for years in large monthly full pay set ups needlessly because they didn’t check along the way whether there was another and better way to deal with the debt.

PENALTY

If a full pay arrangement is your only option for now, it will make sense to review whether you are a candidate for “penalty abatement”. The IRS penalizes you for a late filed return and for paying the debt late and these two penalties with interest can grow to as much as 50% of the debt. If this is your first time in long while paying or filing late, or if your late pay/late file happened for a good reason, you may be able to reduce the debt substantially and get a better monthly payment as a result.

THINGS MAY CHANGE

Just because you are in a “full pay” installment agreement with the IRS now, doesn’t mean that you stay in it long term. Your financial situation may change, you may become a better candidate to settle the debt or bankruptcy it at some point down the road. Understanding how legal options work is key to possibly reducing the debt at some point.

The key to dealing with IRS debt is fully understanding your options, short and long term, and creating a plan that make sense.

NEXT STEP

If you are dealing with a serious IRS debt the next step is to speak with an experienced Arizona IRS debt resolution attorney who can review your history and financial information and help you determine what to do. You may need to arrange a full pay installment agreement for now, but that might change down the road.

DISCUSS WITH ATTORNEY

FAQ - FULL PAY IRS DEBT

  • Most people end up in a full pay installment agreement with the IRS because they don’t have a better choice.

    They don’t qualify or failed at trying to settle the debt in an offer in compromise or partial pay arrangement, bankruptcy doesn’t make sense, or they can’t wait out the 10 year statute period and risk levy.

    But even when it is the only choice there are reasons why it can make sense as well.

    AVOIDS DISCLOSURE

    Some people are better off avoiding the need to get into their financial situation with the IRS. This is usually because the IRS may want assets or a higher payment than the full payment amount would be monthly.

    SIMPLER

    If the debt is below 250k - it’s usually much simpler to convince IRS collections to set up a full pay arrangement than an arrangement based on financials. In my opinion - can be done without help if determine be it’s best option.

    TIME BUYER

    Sometimes when some time is needed to do something more complex like an offer or bankruptcy, an installment agreement is necessary to keep the IRS collection machine at bay - this can be the easiest way to do it.

  • You won’t necessarily,,, unless you have someone with experience, who is willing to be honest about the pros and cons of your other options, review your history and your finances to compare challenging the debt, to settling it, bankrupting it, or fully paying it.

    There are reasons to use full pay as an option in the short term even when it makes sense to do something else in the long term.

  • Yes. Sometimes… and because it can be easier to set up a full pay arrangement people use it in the short term while they plan/work on a different/better option.

  • Yes - you may be a good candidate for first time penalty abatement or even “reasonable cause” penalty abatement. Sometimes people attempt to eliminate penalty using one of these options while in a full pay plan and if they succeed and the debt is substantially reduced as a result, they ask the IRS to re calculate/lower the monthly payment.

  • Yes, and which one you use depends primarily on the amount of debt.

    Short term (180 days)

    The IRS will usually agree to a 6 month extension to pay in full. This includes penalty/interest. Can apply online.

    Guaranteed

    IRS debt less than 10k, excluding penalty/interest. 3 year term.

    Streamlined

    Debt less than 50k - 72 months or the collection expiration date used as time period - whichever is shorter.

    Non-streamlined

    IRS collections will usually agree to an installment agreement that spreads the debt out over the statute period that remains where the debt is between 50k and 250k without financial disclosure. If case is with a revenue officer or even with appeals may lose ability to avoid disclosure and to pay debt based on time-frame.

    Full pay - multi step plan

    When the IRS forces you to disclose your financials and wants to limit your budget dramatically, it may agree to set up a payment plan base on most of your actual budget for one year and then their budget thereafter if the debt is full paid within 60 months thereafter. They do this to give the taxpayer a chance to change their budget to more closely resemble the IRS’s allowed budget. This is a full disclosure situation… but time based nonetheless.

  • You will want to have someone review your situation to make sure that a full pay installment agreement is the best option before you set it up. In other words, eliminate what may be options that would get rid of debt - if they don’t have a chance of working.