How to Request a Partial Payment Plan

If you have enough money to pay down even a portion of your tax debt, don't wait! Getting out of debt with the IRS is much easier than you might think. One of the most simple ways is to set up a partial payment plan. A partial payment plan means that you pay regular monthly payments to the IRS for an agreed-upon length of time, and at the end of the term, your remaining debt is forgiven. This is a great plan for those who are able to pay something towards their debt, but cannot afford a lump sum, and/or cannot afford to pay the entire amount.

Creating Your Proposal

It only takes about two hours to complete your request for a partial payment plan, especially with the help of a tax professional, such as a CPA. You must have several forms detailing your outstanding tax debt, as well as three months worth of documentation for your income and expenses. This means copies of your pay stubs, utility bills, receipts for rent or mortgage payments, etc. Your tax professional will gather all of your data into a request for a partial payment plan.

Using your income and expenses as a guide, your tax professional will help you determine how much you can afford each month, and how long you can afford to pay. If you can only afford $50 a month, you'll need to pay for a longer term. If you can pay $250 a month, you can request a shorter period of payment. Your tax professional will also help you determine what percentage of your tax debt you can propose to pay off.

Paying Your Debt

Keep in mind that if you can afford to pay off the entire amount, you can set up a regular monthly payment plan with the IRS. If you owe $10,000, but you can only afford to pay $25 a month, you would spend more than 33 years paying off your debt! With a partial payment plan, the IRS might agree to let you pay $25 a month for ten years. Or $100 a month for two and a half years. You can create a flexible plan that works for you. The actual amount that the IRS will accept can vary greatly depending on your situation. This is why it is worthwhile in nearly every case to have a tax professional by your side. They have proposed partial payment plans before for other people in debt, and they know what a realistic offer looks like, and what has a good chance of being accepted.

The IRS is very flexible these days, and accepts many forms of payment. You can mail a check or money order, pay with your credit card, or newest of all, have your monthly payment automatically withdrawn from your bank account. This is a great way to pay, because with partial payment plans, on missed payment will cause you to be removed from the program! Then you'll need to find another way to pay your tax debt. If you have the funds automatically removed from your bank account, you never have to worry about a check being lost in the mail.

If you want to have the money drawn from your bank account, ask your bank about its policy for automatic withdrawals. In many cases, if you don't have enough money in your account, the bank will pay the IRS anyway, and charge you a non-sufficient funds fee. Those fees can be steep, but at least you can avoid defaulting on your partial payment plan. Paying the IRS should be your first concern. They don't take kindly to those who don't pay!

Choosing a partial payment plan allows you to settle with the IRS without breaking the bank. You'll feel so much better when you know that those late fees aren't mounting any longer!

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