What if you can't afford the payment the IRS wants? You can reduce your payment if the IRS payment is going to cause an "undue hardship". What does this mean? It is very straightforward. If your allowable living expenses consume all of your income or enough of your income that making a full payment will cut into your necessary monies needed to live, it is an undue hardship. You can then request a Partial Payment Installment Agreement or PPIA.
A PPIA lets you reduce overall tax debt while still paying off an amount the government deems is fair. But how do you do it?
Determine If You Qualify
In order to qualify you must meet a few basic qualifications:
•You do not have the ability to make a full payment
•You are not in bankruptcy
•You have never had an Offer in Compromise with the IRS
•You are unable to liquidate or borrow against your assets or can show that selling/ borrowing against assets would create a financial hardship (IRS cannot require the sale of the house, necessary autos, equipment needed for income, etc.)
There are several steps involved with requesting a Partial Payment Installment Agreement, and each must be taken to qualify. They include:
•Determine what you owe (best done as a compliance check by a settlement company).
•Complete Form 9465. This is the initial Installment Agreement Request. The form is complex, and as such it is better to allow your tax advisor to assist with the form. Your advisor can also help calculate a reasonable, acceptable monthly payment to propose to the IRS.
•Complete form 433-A. This is a Collection Information Statement, and it is used to show your financial information to the IRS for their review.
•Submit the information.
On average, you will get a response within 90 days. The IRS may request additional information, or they could approve or deny your request outright. You will need to negotiate and work with the IRS in many cases to ensure that you find a solution for your tax burden. It is best to negotiate this directly with the IRS on the phone.
Should you hire someone or go it alone?
If your situation is anything other than simple, you want to consider a tax relief advisor. If you are facing a tax debt and want to consult with our team Contact Tax Relief Advisers. We will give you your options so you can make an informed decision.