Tax debt is a serious issue with substantial potential impacts on your life and financial status. When you owe money to the Internal Revenue Service (IRS) or the Indiana Department of Revenue (DOR), the weight of the possible consequences can be too much to bear alone. If you need help with tax debt in Indiana, a tax lawyer at Camden & Meridew, P.C. can shoulder some of these burdens and identify the best way or ways to resolve your tax debt. An IRS installment plan or Indiana tax payment plan are among the options to consider.
How Payment Plans Can Help with Tax Debt in Indiana
Tax payment plans allow individual and business taxpayers who qualify to pay their tax debt over time when they are unable to pay the full amount in a lump sum. While there may be additional fees and accumulation of interest, the ability to spread these payments out over time can allow taxpayers to avoid collection actions like tax liens or levies, minimize the initial impact of the tax debt, and work the payments into their monthly budgets.
Some simple tax payment arrangements can be handled by the taxpayer by applying online for a payment plan or by contacting the IRS or Indiana DOR. If you owe significant sums or have a more complex tax matter, however, proceeding without professional guidance from an Indiana tax lawyer is inadvisable. An Indianapolis tax attorney from Camden & Meridew can help with tax debt in Indiana by evaluating your potential payment or relief options to find the most effective path forward.
What If I Don’t Pay My Taxes? Consequences of Tax Debt Outlined by an Indiana Tax Attorney
One of the worst choices you can make when it comes to tax debt is to delay addressing it. The consequences of not taking action are extremely serious, and tax debt will continue to mount due to the accrual of interest and late payment penalties. Contacting an Indiana tax lawyer can be the first step to regaining control over your financial well-being.
The consequences of unpaid tax debt include tax liens—claims against your current and future property and assets, including your home, vehicles, wages, and financial accounts. Ultimately, your property can be seized (levied) to pay your tax debt. Failure to pay taxes can also result in the revocation of your passport.
Help with Tax Debt in Indiana: Who Qualifies for an Indiana Tax Payment Plan?
An Indiana tax payment plan is an option for taxpayers who need tax debt help because they cannot pay their Indiana state tax bill in full at the time it is due. Individuals who owe more than $100 and businesses that owe more than $500 may apply for this assistance online or by contacting the DOR Payment Services Division.
Payment in full is required for individuals who owe $100 or less and businesses that owe $500 or less to the Indiana DOR. For those who owe more and qualify, payment plans can be established with the following timeframes to complete payment:
- Up to 12 months for individuals who owe between $101 and $1,000 or businesses that owe $501 to $1,000;
- Up to 24 months for individuals and businesses with $1,001 to $5,000 in tax debt; and
- Up to 36 months for individuals and businesses with tax debt of $5,001 or more.
If you need help with tax debt in Indiana, an experienced tax lawyer can review your case to determine the best options for your specific situation.
Who Qualifies for an IRS Installment Plan?
IRS installment plans are available to taxpayers who meet certain requirements. If you can’t pay your federal tax bill in full when due but can pay within 180 days, you may be eligible for a short-term payment plan with the IRS. Payment plans that exceed 180 days are generally referred to as installment agreements. These agreements can extend up to 72 months unless other arrangements are negotiated.
To qualify for tax debt help through IRS installment plans, taxpayers must have fulfilled all current federal tax filing and payment requirements to date. If you are delinquent in filing your taxes, have a history of outstanding tax debt, or are engaged in bankruptcy proceedings, contact an Indiana tax attorney at Camden & Meridew to discuss alternative options that will better suit your circumstances.
Those who meet all filing requirements and have paid previous tax debts may apply for IRS installment plans. For individual taxpayers, the IRS guarantees approval of payment plans or installment agreements that meet the following terms and conditions:
- The taxpayer is financially unable to pay the debt in full.
- The taxpayer’s total tax debt is less than $10,000.
- All tax forms have been timely filed by the taxpayer within the past five years.
- The taxpayer has not previously used an installment agreement.
- The taxpayer agrees to pay the debt in full within three years.
- The taxpayer agrees to continue to comply with all tax laws and requirements.
IRS Installment Agreement Requirements and Terms
When you enter a formal payment plan with the IRS, you agree to be held to certain requirements and terms. Failure to comply with the terms of an IRS installment agreement or to pay the agreed-upon payments can result in termination of the agreement. Once terminated, the IRS can take action against you to collect the tax debt in full, including tax liens and levies as previously described.
IRS installment agreement requirements include the following obligations on behalf of the agency and taxpayer:
- The IRS allows the taxpayer to make payments on tax debt over a predetermined period.
- The taxpayer agrees to make all payments on time.
- The taxpayer agrees to meet future tax obligations, including filing and payments.
- The taxpayer will update the IRS regarding his or her financial status should it change and upon request.
- Tax refunds due to the taxpayer during the term of the agreement will be applied to the current debt and this will not change the terms or payment schedule of the installment agreement.
If a taxpayer fails to make payments or cannot meet the terms of an installment agreement or payment plan, it is very important to request a modification of the plan or other relief. If your IRS or Indiana tax payment plan is in default or your ability to pay is compromised and you need help with tax debt in Indiana, an experienced tax lawyer can help identify and proceed with your next best steps.
How to Get Federal Tax Debt Help in Indiana
If you owe less than $50,000 to the IRS, you may apply online for short- or long-term plans and agreements. IRS Form 9465, Installment Agreement Request is used to apply for IRS installment agreements by mail. The form can be attached and submitted with your income tax return or separately. However, this form is not used for short-term payment plans.
Requests for tax relief by payment plan or installment agreement must include the amount you intend to pay and the period over which you propose to pay the debt. The IRS may also require you to submit proof of your financial status via a Collection Information Statement, Form 433F, 433-A, and/or 433-B before it will approve an installment agreement.
IRS payment plans and installment agreements can be established and structured in multiple ways, each with a different process and fees. The related fees vary depending on how you apply and how you intend to pay. Options for payments include automatic direct debit, direct payments made from a checking or savings account, check or money order, credit or debit card, and payroll deductions. Some payment options involve additional fees.
How an Indiana Tax Lawyer Can Help with Tax Debt
An Indiana tax lawyer can evaluate your state and/or federal tax debt and explain the various options available to you. An attorney can also help you through the process of requesting an IRS or Indiana tax payment plan by providing these services:
- Determining what amount is reasonable both in terms of acceptance and your ability to pay;
- Evaluating the best payment method for you;
- Comparing costs and fees, including interest and penalties, associated with payment plans versus using a bank loan or other credit options to pay your tax debt;
- Accurately completing all necessary forms and applications; and
- Communicating with the DOR and/or IRS on your behalf.
Get Help with Tax Debt in Indiana
In addition to reserving the right to terminate payment plans due to default, the IRS can also discontinue your payment plan if information provided in your application is found to be false, fraudulent, or inaccurate. While a federal or Indiana tax payment plan can be a good option for some to pay tax debt, a thorough evaluation by an Indiana tax lawyer will help you choose the best method for resolving your debts. Your attorney can then help you apply properly for relief.
Julie A. Camden, an Indianapolis tax lawyer at Camden & Meridew, P.C., stands ready to help with tax debt in Indiana. Contact the firm today by calling 317-770-0000 or completing this online contact form.