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 TAX INSTALLMENT AGREEMENTSNot surprisingly, tax issues can take a toll on physical health, mental health and often produce a feeling of helplessness.  Delinquent taxpayers will often freeze up and ignore the issues entirely, make poor tax installment agreements with the IRS or seek help from out-of-state companies that don’t create customized, viable or successful long-term solutions.  Although tax problems often seem unmanageable or hopeless, specialized experienced, local tax professionals know all the laws and procedures available to resolve even the worst of tax problems.

At the Law Offices of Neil Crane, we understand how daunting and scary it can be to approach your tax debt, but you need to learn solutions.  Each case is important.  We always take a fully customized approach that addresses your specific goal.  With our experienced help, tax problems are resolvable through a variety of powerful legal options.

What is an IRS Tax Installment Agreement?

An IRS or State Tax Installment Agreement is a process that allows for the repayment of past-due tax balances over time. These agreements can apply to State and Federal Taxes.

Tax Installment Agreements allow delinquent taxpayers to pay back overdue taxes in accordance with a monthly payment plan.  The ability to obtain an Installment Agreement depends on individual circumstances and the amount and type of the tax obligation.  Installment Agreements normally cover income taxes.  The agreements are either a matter of right under State and Federal taxing rules or they are made by agreement with the express consent of State or Federal revenue collections officers.  Larger tax claims require revenue officer consent and proven persuasive circumstances, while tax bills under certain amounts are often subject to automatic payment schedules pursuant to statutory criteria. The Federal government has a more complete and uniform system for Installment Agreements than the State of Connecticut Department of Revenue Services with numerous options, including:

  1. Non-disclosure Installment Agreements – for debts under $25,000 and payable within the plan period
  2. Full Disclosure Installment Agreements – for debts over $25,000 or not payable within the plan period
  3. Partial Payment Installment Agreements – for taxpayers with an inability to pay in full
  4. Tiered Installment Agreements – for taxpayers under $25,000 with an inability to pay in equal installments.

Within these types of Installment Agreements, you can then choose from:

  • Guaranteed Installment Agreement
  • Streamlined Installment Agreement
  • State Income Tax Agreements
  • Non-streamlined Installment Agreement
  • Small Business Installment Agreements

Guaranteed Installment Agreement

Under certain criteria, a proper application to the IRS can result in a granted Installment Tax Agreement without individual Revenue Officer consent:

  • Eligibility
    • Individual balance is less than $50,000
    • Business balance is less than $25,000
  • Long-term Payment Plan
    • Set up online
      • Online Payment Agreement Application
    • Individuals who owe less than $50,000 can pay balance in up to 72 monthly payments
    • Business owners who owe less than $25,000 can pay balance in up to 24 monthly payments
    • $149 set-up fee
  • Short-term Payment Plan
    • Pay balance in less than 120 days
    • No set-up fee
  • Requirement
    • File required tax returns
    • Provide proof of financial status
  • Cons
    • Unpaid balance accrues penalties and interest during the plan
    • IRS may file Notice of Federal Tax Lien

Streamlined Installment Agreements

If the taxpayer qualifies for a Streamlined Installment Agreement balances under $50,000 can be paid over 72 months or less by direct deduction and avoid tax liens:

  • Balance due is less than $50,000
  • Can set up without Collection of Information Statement/Determination to file Notice of Federal Tax Lien
  • Most taxpayers who owe less than $25,000 are eligible
  • Eligibility
    • Individuals/out-of-business sole proprietors with assessed balance of $50,000 or less
    • Out-of-business taxpayers with assessed balance of $25,000 or less
    • In-business taxpayers with income tax only assessed balances of $25,000 or less
    • File all required tax returns
  • Criteria
    • Less than 72 months or the months necessary to pay in full by Collection Statute Expiration date, whichever is less
    • Notice of Federal Tax Lien
      • Determination unrequired for balances of $25,000 or less
      • Determination unrequired for balances $25,001 – $50,000 with direct debit/payroll deduction
      • Determination required for balances over $25,000 without direct debit/payroll deduction

State Income Tax Installment Agreements

State tax law provides very little protection or stated procedures for state residents seeking Installment Agreements without Revenue Officer consent.  You are entitled to a 12-month Installment Agreement for State Income Taxes if:

  • You have State income taxes due under $10,000 and:
  • Your account is not yet in collection status with the Department of Revenue Services or an independent collection agency; and
  • Your account is not under warrant, bankruptcy, suspense or criminal action; and
  • All return filings are current

All tax problems with the State of Connecticut Department of Revenue Services are difficult and dangerous.  If you have State tax problems over $10,000, seek professional help from a local tax accountant or bankruptcy tax attorney experienced in dealing successfully with the Connecticut taxing authorities.

All other State Installment Agreements for Income Tax and Withholding Taxes as strictly at the voluntary consent of the DRS Collection Division. This means that all State tax problems over $10,000 or not payable within 12 months require direct consent of a Connecticut Tax Revenue Officer. In general, this requires a full and organized presentation to the Department of Revenue Services, presented and advocated on your behalf by an experienced Connecticut State Tax professional.  Don’t try it yourself and never rely on an outside national company to present a Connecticut State Revenue officer with your plan.  You need experienced local Connecticut accounting and legal representatives.

Streamlined Small Business IRS Installment Agreements

The IRS offers a Streamlined Installment Agreement process for small businesses with tax obligations under $25,000.  At the Law Offices of Neil Crane, LLC, we’ve helped hundreds of small business owners with serious tax problems throughout Connecticut.  We understand the special needs and options available to hardworking small businesses with financial pressures and pressing State tax problems.

Online Small Business Tax Payment Plan

 Businesses with Federal tax problems under $25,000 who meet eligibility requirements can qualify for an Installment Agreement. The Streamlined Business Installment Agreement allows small businesses and d/b/a small businesses to pay overdue tax obligations of up to $25,000 over a period not to exceed 24 monthly installments.  The procedure is also available for debt over $25,000 if the balance can be paid down to that amount prior to qualifying for the streamlined process.

  • Eligibility
    • Business owner
    • Owe $25,000 or less in combined payroll, business taxes, penalties, interest
    • Can repay in 24 months
  1. Determine eligibility
  2. Owe $25,000 or less for current/prior calendar year
  3. Agreements for liabilities between $10,001 and $25,000 must be Direct Debit Installment Agreement
  4. Filed all required tax returns
  5. Can pay in full in 24 months
  6. Gather information
    1. Highest amount you can pay and when
    2. If you have filed tax return and receive bill from IRS, gather:
      1. Employer ID number and date it was assigned
      2. Caller ID #
    3. If you filed tax return, owe taxes, didn’t receive bill, gather:
      1. Employer ID# and date it was assigned
      2. Business address
  • Tax form and period
  1. Amount owed
  2. If you’re interested in Direct Debit Installment Agreement, gather:
    1. Employer ID # and date it was assigned
    2. Caller ID #
    3. Bank routing and account #s
  1. Submit application
  2. Receive immediate notification of approval/denial

Small Business Tax Problems Create Personal Tax Liabilities

Most small business tax problems create personal liability to owners and/or parties deemed to be “in control” by taxing authorities.  Business tax problems also create other forms of business and personal borrowing that often work to exacerbate the problem and make it worse.  Small business tax problems are often a good signal to seek professional help and legal answers to your tax and financial problems.

When facing tax problems, small business owners need prompt and experienced advice as early as possible.  Delay can be deadly to small business owners with tax problems.  These companies often face other financial challenges that required the knowledge of our specialized debt relief attorneys.

To address the tax needs of your small business, contact us online or by calling us at 203-230-2233.  You’ll always speak with an attorney; we never use voicemail.  We offer a free initial consultation to review your personal and small business tax concerns.  We have office locations in Hamden, Bridgeport, Ridgefield, Waterbury, and Rocky Hill, Connecticut.

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