The Internal Revenue Service Partial Payment Installment Agreement option was created on January 17, 2005 as an option to the Offer in Compromise to pay off tax debts. In a partial payment installment agreement, taxpayers enter into an installment agreement that can result in a partial payment of their tax liability over the lifetime of the collection statute.
Previously, taxpayers who had tax liabilities could not enter into an agreement with the IRS unless they could pay the liability in full. This meant that taxpayers who were unable to pay in full had limited options to pay off their tax debt. This new payment program became possible through the passage of the American Jobs Creation Act of 2004. This statute amends the tax code to allow the IRS to enter into installment agreement for both full as well as partial payment for the taxes owed.
To set up the partial payment installment agreement program, you will need to know the total amount owed to the IRS in unpaid taxes. This amount will be the original tax due, as well as penalties and interest. An experienced New York tax attorney can help you find the correct amount that you owe the IRS. The calculation of the actual installment payment will be based upon IRS collection financial standards in 2013. After the terms of the partial pay installment agreement are fulfilled, the remaining tax debt will be forgiven.
You will need to fill out Form 9465, an Installment Agreement Request. You will also need to fill out Form 433-A, the Collection Information Statement. 433-A is used for both partial payment installment agreements, as well as an offer in compromise (433-A (OIC) version). Since both programs use the same information, an experienced New York tax attorney can help you decide which tax debt relief strategy works best for you. While turning in form 433-A, you will need to provide documentation of your finances, such as three months of records showing all income and expenses reported. The records must be accurate because the IRS will review and verify the information supplied to confirm that the documents are complete and correct. Along with financial documents, taxpayer must provide equity in assets that could be used to reduce the amount of the liability or to help pay the amount in full. Your experienced tax attorney can help you calculate the payment you will be able to afford each month.
The partial payment installment agreement is an option that can be appropriate for many taxpayers who are unable to pay off tax liabilities in full. If you are considering a partial payment installment agreement, consult with a New York tax attorney to ensure that this is the best option for you and ensure that this is the correct program for you, as well as negotiate the most reasonable monthly payment.