Payment of tax to the government is everyone’s responsibility.The government uses the revenue collected in form of taxes to implement major development projects in a country. However, a time comes when taxpayers are unable to service their tax debts due to financial constraints. At such a time, tax collection authorities such as the Internal Revenue Service, becomes hard on the taxpayers compelling them to settle their tax debts or otherwise face penalties.
In today dwindling economy, many people are likely to find themselves unable to settle their tax debts, thus risking penalties and fines from the tax authorities. The governments seems to understand this and has put in place alternative ways for tax debt payment. “One of such alternative arrangements is the installment option,” said the John at Hillhurst Tax Group. Through its tax bodies, the government allows those who are experiencing financial hardships to settle their tax debt little by little as stipulated on the installment agreement.
There are two main categories of installment agreement that are tailored to enable taxpayer meet their tax payment obligations with much flexibility. There is the partial payment installation agreement and the full payment installment agreement. The partial installment agreement involves a long term payment plan that extends until the expiration of the statute collection period. You are allowed to make installments of only what you can afford on a monthly basis even if it’s far below what is normally accepted by the tax authority. The monthly payments are made until the expiration of the period when the tax authority can by law collect your tax dues. When the collection statue period finally elapses, any balance that remains is written of by the government. This is a suitable arrangement for those with irregular monthly income.
Full payment installment agreement is yet another suitable arrangement. Under this category, we have streamlined installment agreement and the financially verified agreement. Streamlined installment agreement enables you to pay taxes amounting to $25,000 or less in full, in a span of five years. Your principal tax liability plus the interest and penalty accruals are taken into account in this arrangement.
For the financially verified installment agreement, you are allowed to pay tax balance in the excesses of $25,000 in a period of more than five years. The agreement requires full disclosure of financial reports to the tax authority and has room for negotiation. Your monthly payments are based on your financial status and the tax body may at times recommend that you liquidate your assets in order to reduce the debt balance
If you are currently under financial crisis and are unable to service your tax debts the normal way, its good to try settling it through installment agreements. Installment agreement will enable you service your tax debt with a level of convenience and flexibility and hence avoid penalties and fines from the government.