If you fail to pay taxes, the government can place a lien on your financial assets, personal property, or real estate. This could notify creditors that it has legal rights over some or all of your assets in Massachusetts.
But 30 days after repayment, the government might remove the claim. And if you are unable to pay all of it at once, you can explore various repayment plans available to you. Skilled Plymouth bankruptcy attorneys can guide you on how to reclaim your financial freedom.
What is the Lowest I can Pay Each Month?
Taxpayers can choose how much they will pay in installments in their repayment plans. The IRS might ask you how much you can afford to pay each month. However, they usually encourage taxpayers to pay as much as possible to reduce the penalties and interests.
Alternatively, you could let the IRS choose a monthly payment for you. But the minimum amount would be the amount you owe in taxes divided by 72. You can find out how much you can pay online or via phone.
Will I Pay Any Fees When Setting Up an Installment Plan with IRS?
The presence or absence of IRS fees depends on how long your repayment plan is. You won’t pay any fees if you can make payments within 120 days. Here is what it might cost you in fees when you pay beyond 120 days in Massachusetts:
- $31 for a direct debit payment plan online
- $107 to set up a direct debit payment plan in person, by mail, or by phone
- $149 to set up the plan online without direct debit
- $225 to set up the plan in person, by mail, or by phone without direct debit
But if you are a lower-income taxpayer, you might reduce the above fees. Speak to a seasoned Plymouth IRS tax payment lawyer to find out how you can apply for the reduction.
What Repayment Plan is Ideal for Taxpayers Owing $10,000 or Below?
It is easy to get your repayment plan approved if you owe $10,000 or less. You might not be subjected to any specific minimum installment requirement. Whichever amount you choose to repay monthly, just ensure that the balance will be cleared within three (3) years.
You might not need to provide additional information to show your financial ability in this repayment plan. Any installment agreement is approved automatically in most instances.
What Should I Do if I Owe More than $10,000 But Less than $25,000?
An installment plan in this category isn’t automatically approved. However, you could increase your chances of approval if you keep it above the minimum acceptable monthly installments. Simply divide the balance you owe by 72 months to find the least amount you can pay.
The IRS might not need additional information to approve your repayment plan. But if the repayment period exceeds 72 months, the plan might be rejected. An experienced Plymouth IRS tax payment lawyer can help you develop a reasonable plan.
How Different Should the Plan Be if I Owe Between $25,000 and $50,000?
To know the minimum possible installment in this plan, you will also divide your balance by the maximum possible period of 72 months. Another determinant for your approval is the additional information you provide.
A skilled Plymouth IRS tax payment lawyer can help you fill Form 9465-FS. A breakdown of your income and expenses could guide the IRS when deciding on whether to accept your repayment plan or not. So, make sure that you ask an expert to help you fill out the forms accurately to avoid frustrations with your repayment plan.
What Happens if I Owe More than $50,000?
If you owe more than $50,000, the IRS usually conducts a thorough review of your finances. Providing additional information is mandatory for this category of taxpayers. You might have to provide detailed information on your bank accounts, income, assets, and investments. The right form to fill when you owe this much in taxes is Form 433-A.
You might be asked to sell some of your valuable assets to offset all or part of the balance. Unlike in all other categories, it is not easy to tell the minimum payable amount. It usually depends on the deal you strike with the IRS.
How Does the Offer in Compromise Work?
Another tax repayment alternative is to request to repay it for less than it’s worth. This option might be worth exploring if you are unable to pay your taxes in full or if doing so might create unnecessary financial hardship.
You might be viable if you:
- Are an employer that has made tax deposits for the current and past two quarters
- Have a valid extension for the year you are applying for
- Haven’t applied for bankruptcy with open proceedings
- Have filed your tax returns and made the estimated payments
When you apply, the IRS might consider your:
- Asset equity
- Ability to pay
And you can opt for one of its two repayment options.
You will make 20% of your proposed payment in this option and submit it with your application. The balance should be paid in five or fewer installments if the offer is accepted.
It involves making the initial payment with the application and continuing to make the monthly repayments. If the offer is accepted, you will continue to make the monthly deposits until you finish paying the proposed amount in full.
Legal Professionals Helping You Get Your Finances and Life Back
Do not allow tax debt to overwhelm you in Massachusetts. IRS offers various repayment alternatives, but you have to pick the most appropriate one for your situation. The options might differ from person to person, depending on how much they owe and their economic abilities.
A knowledgeable bankruptcy attorney in Plymouth, MA, can advise you on the best plan for your situation. We can also guide you on the right forms to fill out and the appropriate information to include. Speak to us today to discuss tax repayments.