Image of a woman and man at a computer with paperwork looking concerned, representing the serious nature of tax debt and how an Indiana tax lawyer at Camden & Meridew, P.C. can help find solutions.

An Indiana Tax Lawyer Explains IRS Installment Plans, State Payment Options

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. An Indiana tax lawyer from Camden & Meridew, P.C. can help you shoulder these burdens and identify the best way or ways to resolve your tax debt.

How an Indiana Tax Lawyer Can Help

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 120 days (or 180 days in some cases due to IRS COVID-19 allowances), you may be eligible for a short-term payment plan with the IRS. IRS payment plans that exceed 120 days are generally referred to as installment agreements. These agreements can extend up to 72 months unless other arrangements are negotiated.

Indiana DOR payment plans are an option for taxpayers who 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 allowance online or by contacting the DOR Payment Services Division.

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 you evaluate all of your potential payment or relief options to find the very best path forward. 

What If I Don’t Pay My Taxes? Consequences of Tax Debt Outlined by an Indianapolis 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 federal 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.

Who Qualifies for IRS Installment Plans?

To qualify for 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 Indianapolis tax attorney at Camden & Meridew to discuss alternative options that will better suit your circumstances.

Those who meet all filing requirements and paid previous tax debts may apply for IRS installment plans. 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.

Applying for Relief: Do I Need an Indiana Tax Lawyer?

If you owe less than $50,000, 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. An Indiana tax lawyer can help you determine what amount is reasonable both in terms of IRS acceptance and your ability to pay.

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 they 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, by check or money order, by credit or debit card, and payroll deductions.

Some payment options involve more fees than others, and an Indianapolis tax attorney at Camden & Meridew can help you evaluate and determine the best payment method for you. We can also help you compare the costs and fees, including interest and penalties, associated with IRS installment plans versus using a bank loan or other credit options to pay your tax debt, as recommended by the IRS.

IRS Installment Agreement Requirements and Terms

When you enter into a formal payment plan with the IRS, you agree to be held to certain IRS installment agreement requirements and terms. Failure to comply with the terms of an 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 of time.
  • 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 take action by requesting a modification of the plan or other relief. If your IRS or Indiana state tax payment plan is in default or your ability to pay is compromised, an Indianapolis tax attorney from Camden & Meridew can help identify and proceed with your next best steps.

Contact an Indiana Tax Lawyer for Assistance

In addition to reserving the right to terminate IRS installment plans on the basis of default, the agency can also discontinue your payment plan if information you 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 to pay your tax debt, a thorough evaluation by an Indiana tax lawyer will help ensure you choose the best method for resolving your debts and apply properly for relief. Julie A. Camden, an Indianapolis tax attorney at Camden & Meridew, P.C., stands ready to help. Contact the firm today by calling 317-770-0000 or completing this online contact form.