Fresh Start Installment Agreements
You can make monthly payments through an installment agreement if you’re not financially able to pay your tax debt immediately. However, you will reduce or eliminate a number of penalties and interest you pay and avoid the fee associated with setting up an installment agreement if you pay your tax bill in full.
In-Business Trust Fund Express Installment Agreements
Small businesses who currently have employees can qualify for an In-Business Trust Fund Express Installment Agreement (IBTF-Express IA). These installment agreements generally do not require a financial statement or financial verification as part of the application process.
The criteria to qualify for an IBTF-Express IA are:
- You owe $25,000 or less at the time the agreement is established. If you owe more than $25,000, you may pay down the liability before entering into the agreement in order to qualify.
- The debt must be fully paid within 24-months or prior to the Collection Statute Expiration Date (CSED), whichever is earlier.
- You must enroll in a Direct Debit installment agreement (DDIA) if the amount you owe is between $10,000 and $25,000.
- You must be compliant with all filing and payment requirements.
Streamlined Installment Agreements
The Fresh Start provisions also mean that more taxpayers will have the ability to use streamlined installment agreements to catch up on back taxes. Under the Fresh Start initiative, the maximum dollar criteria for streamlined installment agreements has been raised from $25,000 to $50,000 and the maximum term has been raised from 60 months to 72 months.
These installment agreements generally do not require a financial statement, but a limited amount of financial information may be required in the application process.
The Streamlined Installment Agreement Criteria is divided into two categories, balance due of $25,000 or less, and balance due $25,001 to $50,000.
The criteria to qualify for streamlined installment agreements with a balance due of $25,000 or less are:
- You owe $25,000 or less, at the time the agreement is established. If you owe more than $25,000, you may pay down the liability before entering into the agreement in order to qualify.
- The debt must be fully paid within 72-months or prior to the Collection Statute Expiration Date, whichever is earlier.
- You must be compliant with all filing and payment requirements.
- Individuals who owe any type of tax (Form 1040, Trust Fund Recovery Penalty, etc.).
- Defunct businesses, including any type of entity and any type tax (Form 940, 941, 943, etc.).
- Operating businesses are limited to income tax liabilities only (Form 1120).
The criteria to qualify for streamlined installment agreements with a balance due of $25,001 to $50,000 are:
- You owe $25,001 to $50,000, at the time the agreement is established. If you owe more than $50,000, you may pay down the liability before entering into the agreement in order to qualify.
- The debt must be fully paid within 72-months or prior to the Collection Statute Expiration Date, whichever is earlier.
- You must be compliant with all filing and payment requirements.
- Individuals who owe any type of tax (Form 1040, Trust Fund Recovery Penalty, etc.).
- Businesses are limited to defunct sole proprietors who owe any type of tax (Form 940, 941, 943, etc.).
- You must enroll in a Direct Debit Installment Agreement or Payroll Deduction Installment Agreement.
- A limited amount of financial information may be required during the application process.
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