Whenever you see tax resolution firms advertise, you’ll usually see a qualifier in their ad that says something to the effect of, “If you owe the IRS at least $10,000, then give us a call.” The reason for this is that if you owe the IRS less than $10,000, there is a provision in the tax code that REQUIRES them to accept your proposal to pay them in monthly installments if you meet certain requirements. In fact, you don’t even need to provide them with financial statements to qualify.
To qualify for a guaranteed installment agreement, you must:
- Owe only income tax, not any other types of tax.
- Have properly filed and paid all tax returns during the 5 years prior to accumulating the tax debt.
- Not be able to pay the tax immediately out of savings or other means.
- Pay the tax fully within 3 years (e.g., the payment plan cannot exceed 36 months).
- File and pay all tax returns on time during the period of the installment agreement.
- Not have had an active installment agreement during the past five years.
- Owe less than $10,000 in TAX, not including penalties and interest.
Another beautiful thing about guaranteed installment agreements is that the normal legal minimum monthly payment of $25 per month does not apply. Yes, you can actually offer payments of $10 per month, and as long as that will fully pay the debt within 36 months, they have to grant you the request!
Lastly, guaranteed installment agreements can be granted by the lowest level collections employees of the IRS without managerial approval. All you have to do is make one phone call to the Automated Collection System (ACS), wait on hold for an hour, talk to a human for 10 minutes, and you’re DONE. If you’re not sure where to call, dial the number in the upper right hand corner of the notices you’ve been receiving and you’ll more than likely be connected to ACS. If you don’t want to talk to anyone, you might be able to do it online.
Do keep in mind, however, that penalties and interest continue to accrue during these – and all other – Installment Agreements, although they are guaranteed by law. Because of this, you may decide it is in your best interest to fully pay any balances due as soon as you possibly can.