Irs Payment Agreement Default

An IRS Payment Agreement Default Can Cost You More Than Just Money

One of the most stressful situations you can face as a taxpayer is being unable to pay your taxes in full when they are due. To alleviate this, the IRS offers payment agreements, where you can make installment payments over time until your debt is satisfied. However, if you don`t make your payments on time, you may default on your agreement, which can result in additional penalties and fees.

What is an IRS Payment Agreement?

An IRS Payment Agreement is a payment plan that allows you to pay your tax debt over a period of time. You can make payments on a monthly basis, and the amount you pay is determined by the size of your debt and your ability to pay.

The IRS offers several different types of payment agreements, including:

– Guaranteed Installment Agreement: for those who owe $10,000 or less and can pay their debt within three years

– Streamlined Installment Agreement: for those who owe $50,000 or less and can pay their debt within six years

– Partial Payment Installment Agreement: for those who owe more than $50,000 but cannot afford to pay their debt in full

What Happens if You Default on Your Payment Agreement?

If you fail to make your payments on time or in full, you will default on your payment agreement. When this happens, the IRS may take the following actions:

– Levy your wages, bank accounts, or other assets

– File a federal tax lien against your property

– Terminate your payment agreement

In addition to these penalties, defaulting on your payment agreement may also damage your credit score and make it more difficult to obtain credit in the future.

How to Avoid Defaulting on Your Payment Agreement

The best way to avoid defaulting on your payment agreement is to make your payments on time and in full. If you are having trouble making your payments, you may be able to modify your agreement or request a temporary delay in payments.

Here are a few tips to help you avoid defaulting on your payment agreement:

– Set up automatic payments to ensure that your payments are made on time

– Make extra payments whenever possible to reduce your debt more quickly

– Notify the IRS if your financial situation changes and you are no longer able to make your payments as outlined in your agreement

Conclusion

An IRS Payment Agreement can be a helpful tool for taxpayers who are struggling to pay their taxes. However, defaulting on your agreement can result in additional penalties and fees, as well as damage to your credit score. If you are having trouble making your payments, it is important to contact the IRS as soon as possible to explore your options and avoid defaulting on your agreement.