The IRS recently announced it will test an expansion of its Streamlined Installment Agreement Program for Taxpayers who owe less than $100,000.
In all Streamlined Installment Agreements, the dollar threshold is based on the “Unpaid Balance of Assessments,” which often may be less than the amount the Taxpayer actually owes.
For example, when a Taxpayer files a tax return, the IRS will usually assess the amount of tax, plus any interest and penalties accrued to the date of assessment. Generally, these amounts, less any payments and withholdings, comprise the “Unpaid Balance of Assessments.”
But after the initial assessment, penalties and interest continue to accrue on the unpaid amount owing until it is paid in full, albeit they may not yet be “assessed.” As a result, Taxpayers who actually owe as much as $120,000 or more (even though some interest and penalties in excess of $100,000 have yet to be formally assessed) may still qualify for a “Streamlined Installment Agreement.”
And those who are over but close to the $100,000 mark, can pay down the liability (which must be done carefully to ensure it is applied to the correct portion of the liability) to bring it within the $100,000 Streamlined criteria.
The primary benefit: an automatic installment agreement (i.e. without having to provide detailed financial information), as long as the Taxpayer agrees to a Direct Debit Installment Agreement (“DDIA,” where the IRS automatically deducts the monthly payment from a checking or savings account) that offers a monthly amount to pay the entire liability within the earlier of 84 months, or the remaining life of the collection statute of limitations (generally 10 years from the date the tax was assessed).
To determine whether you qualify for any of these programs, or if there might be a more beneficial resolution for your outstanding tax liability, contact one of the attorneys at Anderson & Jahde.