What is an Installment Agreement?
This agreement allows taxpayers to pay the tax debt they owe in monthly payments. The taxpayer owes the entire tax debt but keeps the IRS from taking collection actions against them by paying monthly. A tax professional can still provide value by proposing the lowest monthly payment the IRS will accept.
It’s often we get new clients who work with us just so we can lower their monthly payment by hundreds of dollars. In some cases, we have reduced monthly payments by thousands of dollars.
When is it Used for Tax Relief?
An installment agreement is used for tax relief when the client isn't able to qualify for an offer in compromise. Although it's not the best outcome for tax relief, it absolutely provides value.
An installment agreement will allow you to make monthly payments to the IRS to pay down a tax debt. In exchange, the IRS will not take any collection actions against you.
The benefit of an installment agreement prepared by a tax professional will allow you to pay the minimum payment the IRS will accept. Otherwise, one risks calculating a payment that may be too high and unreasonable.