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Offer in Compromise

Installment Agreements

Can’t pay your tax bill in one lump sum? No worries! An Installment Agreement allows you to break down your tax debt into more manageable monthly payments. The IRS offers different types of installment agreements:

BEFORE WE START, you must understand that for each option below there must be a full set of financials prepared to be accuate whiche one you would qualify for. 

• Full Pay Installment Agreement: You agree to pay off the entire debt over a period. This option is great if you need some breathing room to pay the full balance without having to sell your kidney (joking… mostly, unless your spouse wants to sell one, but I think you get the picture!)

• Partial Pay Installment Agreement: If paying off the full debt is out of the question, the IRS may allow you to pay a portion of your debt over time.

  • A Secret Weapon When Used Properly: After the agreement period ends, the remaining balance could be forgiven, especially if the collection statute expiration date is approaching. A Partial Pay Installment Agreement can be a secret weapon, sometimes even more effective than an Offer in Compromise, depending on the circumstances. It allows you to pay only what you can afford for a limited period, potentially leading to a significant portion of the debt being forgiven once the collection statute expires. Square One Tax Resolutions will help you leverage this option to its fullest potential, ensuring that you benefit from the best possible outcome.

The longest period the IRS typically permits for an installment agreement is 72 months (6 years) or until the Collection Statute Expiration Date (CSED), whichever comes first. The CSED is usually 10 years from the date the IRS assessed the tax.

• Understanding the CSED is critical because it directly affects how long you have to pay and how much you might ultimately owe. This is why you need a professional; navigating this on your own can be challenging and daunting. At Square One Tax Resolutions, we know exactly how the IRS operates and will ensure your installment agreement works within these constraints.

• Why Financials Matter: Before we decide on the right type of installment agreement, we first need to go through your full set of financials. You might think you qualify for a partial pay agreement and have an idea of what you "think" you can pay.

  • However, the IRS doesn’t operate on gut feelings (even if you’ve got Gibbs' NCIS instincts!). They require the actual numbers. At Square One Tax Resolutions, our job is to thoroughly analyze your financial situation and determine exactly what the IRS will expect. This way, we know what they'll accept before we contact them on your behalf.

Pro Tip: With either option, you’ll avoid the IRS’s nastier collection methods, like wage garnishments or bank levies, as long as you stay current with your payments.

Pro Tip: Sometimes a taxpayer may want to enter into an installment agreement while waiting for significant life changes that could make them eligible for an Offer in Compromise later. No one said you can't pursue an OIC at a later date! It's all about timing, and timing can sometimes be a legitimate strategy in managing tax debt.

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