Here’s a rewritten version focusing on clarity, conciseness, and a more professional tone:
IRS Installment Agreements: Options After Offer in Compromise Rejection
A rejection of an Offer in Compromise from the IRS can be concerning, but installment agreements offer alternative repayment solutions. The IRS provides various installment options, including full-payment and partial-payment plans. The plan you qualify for depends on your financial situation, and payment calculations differ from Offer in Compromise settlements.
Full-Payment Installment Agreements
- Guaranteed Installment Agreement:
- Available for tax debts under $10,000.
- Full payment must be achievable within three years.
- The IRS is obligated to approve eligible applications.
- Streamlined Installment Agreement:
- Available for tax debts under $25,000 (including principal, interest, and penalties).
- Full payment must be achievable within five years (60 months).
- Monthly payments are calculated by dividing the total owed by 50. The remaining 10 months are for interest.
Partial-Payment Installment Agreements
- Allows taxpayers to pay only what they can afford monthly, even if it’s less than the full amount owed.
- Payments continue until the Collection Statute Expiration Date (CSED).
- Any remaining balance at the CSED is effectively written off.
- Collection Statute Expiration Date (CSED):
- Contact the IRS to obtain the CSED for each tax debt period.
- The statute typically begins when the tax return is filed or the principal tax balance is assessed, whichever is later.
- The statute generally expires after 10 years, but extensions can occur.
- Payment Calculation:
- Payments are based on monthly disposable income (income minus expenses).
- The total amount paid is calculated by multiplying disposable income by the remaining months on the collection statute.
- Payments must be made in installments, not as a lump sum.
Financially Verified Installment Agreement (Non-Streamlined)
- Applies to tax debts exceeding $25,000 or repayment periods exceeding 60 months.
- Requires negotiation with the IRS and full financial disclosure.
- Monthly payments are determined based on a comprehensive financial review.
- The IRS may require asset liquidation to reduce the balance owed.
Key Considerations:
- Understand the eligibility requirements for each installment agreement option.
- Accurately calculate your disposable income and determine your ability to make monthly payments.
- Obtain the CSED from the IRS to understand the timeframe for repayment.
- Be prepared to provide thorough financial documentation to the IRS.
- Seek professional tax advice.