Expanded Installment Agreement

An expanded installment agreement is a payment plan provided by the Internal Revenue Service (IRS) to taxpayers who cannot pay off their tax debt in one lump sum. It allows taxpayers to make smaller payments over an extended period of time, which can help them avoid collection actions against them.

If you owe the IRS taxes but cannot pay them, an expanded installment agreement may be an option. This type of agreement has a few advantages over a standard installment agreement. First, the payment period is longer, usually up to 72 months, which can make payments more manageable. Additionally, taxpayers with larger tax debts may be able to qualify for an expanded installment agreement, whereas they might not qualify for a standard installment agreement.

To qualify for an expanded installment agreement, taxpayers must meet certain eligibility requirements. These include:

– Owning less than $50,000 in combined tax, penalties, and interest owed to the IRS

– Being able to pay the tax debt within 72 months

– Filing all required tax returns

– Being current on estimated tax payments and withholding taxes

If a taxpayer meets these requirements, the IRS may approve an expanded installment agreement. The taxpayer will need to complete an application and provide financial information to the IRS, including income, expenses, and assets. Based on this information, the IRS will determine the monthly payment amount.

It`s important to note that interest and penalties will continue to accrue on the tax debt during the installment agreement period. This means that the total amount owed will increase over time, even if the taxpayer is making regular payments. However, the expanded installment agreement can help avoid more severe collection actions, such as wage garnishment or bank levies.

If you`re considering an expanded installment agreement, it`s essential to work with a qualified tax professional who can help you navigate the process. They can help you determine if an expanded installment agreement is right for your situation and assist you in preparing the necessary paperwork and financial information.

In conclusion, an expanded installment agreement can provide relief to taxpayers struggling to pay their tax debts. It can help avoid more severe collection actions and provide a manageable payment plan. If you`re considering this option, be sure to work with a qualified tax professional to ensure the best outcome for your situation.