Are you struggling to pay your tax bill to the IRS? If so, don’t worry! The IRS offers payment plans (also called installment agreements) to help taxpayers manage their tax debt. These payment plans are designed to make it easier for taxpayers to pay their tax bills over time, rather than having to pay the entire amount at once.
If you’re unable to pay your tax bill in full by the deadline, you may be eligible for a payment plan. IRS payment plans can be short-term or long-term, depending on your circumstances and the amount you owe.
Short-Term Payment Plan
A short-term payment plan allows taxpayers to pay their tax bill over a period of 180 days or less. To qualify for a short-term payment plan, the total amount owed must be less than $100,000, including penalties and interest. This payment plan option doesn’t require a fee to set up. However, interest and penalties will continue to accrue until the balance is paid in full.
Long-Term Payment Plan
If you need more time to pay your tax bill, you may be eligible for a long-term payment plan. This option allows taxpayers to pay their tax bill over a period longer than 180 days, in monthly installments. To qualify for a long-term payment plan, the total amount owed must be less than $50,000 for individuals and $25,000 for businesses, including penalties and interest. There is a fee to set up a long-term payment plan, which may be waived or reduced for low-income taxpayers.
Applying for a Payment Plan
To apply for an IRS payment plan, you can visit the IRS website and complete the Online Payment Agreement application. The application will ask for information about your tax liability, income, and expenses to determine your eligibility for a payment plan. If you’re eligible, you’ll be able to choose between a short-term or long-term payment plan and set up automatic payments.
Benefits of IRS Payment Plans
One of the biggest benefits of an IRS payment plan is that it allows taxpayers to pay their tax bill over time, rather than having to pay the entire amount at once. This can make it easier for taxpayers to manage their finances and avoid financial hardship. Additionally, if you’re on a payment plan, the IRS will generally stop collection activities such as liens, levies, and wage garnishments.
How Can a CPA Help?
Evaluate Payment Plan Options
A CPA can help businesses evaluate their payment plan options based on their financial situation and tax liability. They review the business’s financial records, tax returns, and other financial information to determine the best payment plan option for the business.
Negotiate with the IRS
CPAs also help businesses negotiate with the IRS to reduce the amount owed, waive penalties, and set up a more favorable payment plan. A CPA can communicate with the IRS on behalf of the business, providing documentation and supporting information to strengthen the negotiation.
Set up Automatic Payments
To ensure that payments are made on time, a CPAs help set up automatic payments for IRS payment plans. This can help avoid missed payments and prevent additional penalties and interest charges.
Monitor Payments
CPAs monitor the business’s payments and ensure they are being made on time and in full. They also keep the business informed about changes to the payment plan or tax laws that may affect payment obligations.
Provide Tax Planning
A CPA can also provide tax planning services to businesses, helping them reduce their tax liability in future years. By taking proactive measures to reduce tax liability, businesses can better manage cash flow and avoid falling behind on tax payments
Is a Payment Plan Right for You?
If you’re unable to pay your tax bill in full, an IRS payment plan may be a good option. Whether you choose a short-term or long-term payment plan, it’s important to make your payments on time and in full to avoid additional penalties and interest. Setting up a payment plan, allows you to manage your tax debt and avoid collection activities by the IRS. So, don’t hesitate to explore your payment plan options and find a solution that works for you.
For more tips and help with the IRS, reach out to our team of financial experts at GreenGrowth CPAs. We are here to help your cannabis venture through any level of the accounting, tax filing, or business cycle. We employ several financial programs to assist the company with its fiscal responsibilities, including tax planning and compliance, accounting & finance support, audit preparation, tax controversy support, and much more.
