What Happens If You Fail to Make an Installment Payment to the IRS?
When someone owes back taxes to the IRS, it is quite common that they lack the available funds to pay the debt in full. Hence, the Internal Revenue Service (IRS) routinely agrees to an installment payment plan for people who owes back taxes. When an installment plan is agreed upon, the IRS allows you to pay your tax debt over a specified period of time in monthly installments.
How are Installment Payments Calculated?
Generally, the monthly installment payments should be calculated in a way that is reasonable and based largely on your current financial outlook (e.g., income versus expenses).
Even if installment payments are supposed to be “reasonable,” they can still present a significant burden on your budget. In fact, there may come a time when you are unable to make a payment.
If you fail to make a payment toward your tax installment agreement, expect to receive a notice from the IRS. This notice is known as the CP523. This notice will include specific information, including:
- The IRS will seek to terminate your installment agreement due to the default (i.e. the failure to make the payment on time);
- The amount you owe and must pay in order to prevent termination of your installment agreement with the IRS;
- Amount of penalties and interest you will need to pay as a result of the default;
- The deadline for you to pay the amount owed to avoid termination of the installment agreement; and
- Contact information for the IRS, including a mailing address and phone number
If your circumstances enable you to make the payment by the termination deadline, there is a good chance the IRS will allow you to continue making payments under your installment plan.
However, if you are unable to pay the amount owed by the deadline stipulated in the notice, do not give up hope. In such circumstance, it is in your best interest to consult with an experienced IRS tax relief attorney to discuss your legal options.
When you retain the services of an experienced IRS debt relief lawyer such as Anderson Bradshaw they can help you in mediating negotiations with the IRS regarding your tax debt. The IRS may be open to a different and more flexible installment agreement. In order to get an installment agreement reinstated, if payment plan was terminated, it is worth noting that you will typically be required to pay a reinstatement fee to the IRS.
The Importance of Responding to the IRS
When you receive the CP523 notice from the IRS, it is extremely important to provide some type of response. Why? Because if you fail to respond, you are exposing yourself to potentially facing large penalties and interest. In addition, failure to respond could lead the IRS to place a levy on your bank accounts or your wages to obtain the money owed.
If you are struggling with making payment to the IRS, contact Anderson Bradshaw today. Our legal team is ready and able to help. We possess more than three decades of experience handling complex tax disputes for individuals and companies. You will have the confidence and peace of mind in knowing your difficulties with the IRS can be resolved and corrected quickly and efficiently.