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Payment Plans

An IRS Payment Plan is for taxpayers who can't afford to pay off their entire back tax debt at once or for those who can't make large payments to the IRS without experiencing an economic hardship. The key word here is "hardship." One could say that anyone who is paying back the IRS for past due taxes is experiencing an economic hardship in that there are always more pleasurable things to do with one's money. Unfortunately, the IRS doesn't see it that way.

In order to set up a Payment Plan for IRS back taxes and stop collection action, a taxpayer must demonstrate to the IRS that paying all that is due or making excessively large payments to the IRS would result in an undue economic hardship to the taxpayer. This is done by showing that payment of what the IRS is demanding would result in the taxpayer taking food off their family's table or doing without some other necessity of life to give the money to the IRS instead. Fortunately for many people, this is not that difficult to demonstrate. Other times it is a bit harder, but there is almost always some type of resolution available. If you contact us, we will help you deal with the IRS and correctly complete the right forms to set up a Payment Plan that works for you.

The main benefit of setting up installment payments with the IRS is that it will put you back in compliance and you will no longer have to worry about the IRS knocking on your door. The IRS will have disappeared from your life and there will be no threat of levy and seizure (garnishment) of your wages, bank accounts, or any other property. The harassment by the IRS will be completely over, as long as you continue to make the agreed upon payments.

Uncollectable Status

It is possible that by having us take a look at your financial situation, you may actually qualify for a hardship deferment of collection action and be put on uncollectable status. If this is the case, you would then be completely left alone by the IRS and make no payments. Do not count on this, but it does sometimes work out that way. Furthermore, you will not have to wait long for an answer. According to the IRS's internal rules, they must answer your request for hardship within ten (10) working days of receipt of your request. THAT IS FAST!!!

In order to get set up on a really low payment plan or better yet on uncollectable status, you must demonstrate economic hardship to the IRS. You may be asking yourself: "How do I prove economic hardship to the IRS?" Economic hardship according to IRS rules and procedures is when paying the IRS would result in undue or unreasonable hardship to you, the taxpayer. As a taxpayer, you may think that not paying off your VISA debt or a loan from Aunt Mary and giving that money to the IRS instead is unreasonable, but the IRS doesn't see it that way - and they never will.

To view this in the proper perspective, you must look at it from the way the IRS Collections folks do. You see, they have all the power and hold most of the cards. What you have going for you are some reasonable outs provided by Congress and the IRS to keep the system efficient and within the bounds of reason. It is not efficient for the IRS to spend its time and money trying to collect a large sum of money from somebody who has no way of paying so large of an amount. The IRS and Congress have provided for this by instituting Payment Plans. The key is to make sure it is a Livable Payment Plan that you can afford and continue to pay without defaulting. This is what National Tax Relief makes sure of. You do not want to get coerced into a Payment Plan by a revenue officer in which the payments are so high that you will not be able to keep them up in the long run. If you get into a Payment Plan and later default, then you will be in bigger trouble than before.

How to Qualify for a Payment Plan or Uncollectable Status

You must show the IRS on the proper forms that your allowable expenses are equal to, or only slightly less than, your income. This is how you show the IRS that you can pay them only an "affordable and livable amount" without "undue economic hardship." Your allowable expenses are what the IRS considers the necessities of life. In general, they are: food, clothing, housing, utilities, transportation, medical, insurance and work-related expenditures. It is our job at National Tax Relief to help you get into a Payment Plan that fits your budget and gets you out of debt.


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