What is the “Agreement” part of an Installment Agreement?
- October 2, 2018
- David Greene
- Comments Off on What is the “Agreement” part of an Installment Agreement?
An Installment Agreement with the IRS is when the taxpayer agrees to pay a set sum of money for a set duration of time until either the liability owed is paid in full, or the collection period for the liability expires. However, when a taxpayer enters into an Installment Agreement with the IRS both parties agree to more than just a payment amount and duration. The IRS agrees that as long as the taxpayer remains “in compliance” and makes their agreed monthly payment, there will be no further collection action taken on that liability. Collection action in this case includes things such as tax liens, wage garnishments, and bank account levies. On the other side of the agreement, the taxpayer must also remain “in compliance.” This means that the taxpayer must not only make their Installment Agreement payment on time each month, but for all future tax years during the Installment Agreement period, the taxpayer cannot incur any additional tax liability. If there is a new tax liability, you must be able to pay it in full. Additionally for taxpayers that own small businesses, if you are expected to make Estimated Tax Payments, these payments must be made on time throughout the tax year.