If you owe taxes to the IRS that you are unable to pay, it is very likely that you entered in to an IRS installment agreement to pay back the tax debt.  For many taxpayers, an IRS installment agreement is a no-fuss way to pay back their tax debt and get back on track with their tax obligations.

However, changes in income, expenses, and life circumstances down the road can cause issues and lead to a situation where you are no longer able to pay your monthly installment agreement.  If you find yourself in a situation where you are no longer able to meet your ongoing installment agreement payments, there are things that you should know. Michigan Tax Resolution

One Time Skip

The IRS generally allows a one-time payment skip without defaulting your installment agreement.  If you are having a rough month and missed your payment date, it does not mean that the IRS is automatically going to default your payment plan.  If you are still able to make your payments, continue to send them in.  Just remember to watch for notices in the mail.  If your payment plan is defaulted, you will start to receive collection notices again in the mail.

Defaulting a Direct Debit Installment Agreement

If you are on a payment plan where the IRS automatically debits your payment from a bank account each month, not being able to afford your monthly installment payments could create a large issue when it comes to paying for your other monthly bills.  So long as the money is in your account, the IRS will continue to debit it, regardless of whether you need it for rent.  If you are in a direct debit installment agreement, it is important for you or your representative to contact the IRS as soon as you are aware that you are no longer able to afford your current payment arrangement as it takes so time for the IRS to adjust their system to quit automatically debiting your account.

Alternative Tax Resolution Options

The IRS has many resolution programs for resolving your tax liabilities.  It is important to remember that you are not locked in to just one option.  If your financial situation changes, your resolution may need to change as well.  This may mean that you need to adjust your current payment plan, request a temporary hardship status, or file for a tax settlement on your remaining tax debt.  You may also qualify for non-IRS resolution, such as discharging the balances through a bankruptcy. Tax Debt Relief Service Jackson MI

There are a variety of payment plan options offered by the IRS depending on your balance owed and your ability to pay.  One installment agreement offered is based solely on a monthly payment that will pay back your taxes, interest, and penalties within a certain amount of time.   Another type of installment agreement instead looks as how much you can afford to pay back based on an evaluation of your current income, expenses, and equity in assets.

If you instead find yourself in a situation where you are not able to pay any amount towards your back taxes, you may qualify for an Offer in Compromise to settle out your tax debt, or a currently non-collectible status to request a temporary hold while you get back on your feet.