When’s the Best Time to Apply for an IRS Payment Plan

When’s the Best Time to Apply for an IRS Payment Plan

• Apr 29, 2023

If you owe a significant amount of money to the IRS in unpaid taxes, you may be considering applying for a tax debt relief plan. These plans can help you settle your tax debt for less than the full amount owed or set up a payment plan that is more manageable for your financial situation. However, timing can be crucial when it comes to applying for tax debt relief. In this blog post, we’ll discuss the best time to apply for an IRS tax debt relief plan.

When You’re Experiencing Financial Hardship

If you’re currently experiencing financial hardship, such as a loss of income, a medical emergency, or a natural disaster, you may want to consider applying for tax debt relief as soon as possible. The IRS offers various relief options for taxpayers who are facing financial difficulties, including:

• Currently Not Collectible (CNC) status: If you can’t afford to make payments on your tax debt due to financial hardship, the IRS may place your account in CNC status. This means that the IRS won’t pursue collection actions against you for a period of time. However, interest and penalties will continue to accrue on your tax debt.
• Offer in Compromise (OIC): An OIC is an agreement between you and the IRS that allows you to settle your tax debt for less than the full amount owed. To qualify for an OIC, you must demonstrate that you can’t afford to pay your tax debt in full and that settling for a lesser amount is in the best interest of both you and the IRS.
• Installment agreement: An installment agreement allows you to pay your tax debt in monthly installments over a period of time. This option may be more manageable if you’re experiencing financial difficulties but still have the ability to make regular payments on your tax debt.

Regardless of which program you end up qualifying for, if you’re feeling the strain of financial hardship, and paying your tax debt will only exacerbate an already difficult situation, it’s likely a good time to reach out to the IRS about a relief program.

When You First Receive a Notice from the IRS

The best time to apply for an IRS tax debt relief plan is when you first receive a notice from the IRS. If you have unpaid taxes, the IRS will typically send you a notice in the mail that outlines the amount you owe and any penalties or interest charges that have accrued. This notice will also include information about your options for paying off the debt, including installment agreements, offers in compromise, and other tax debt relief plans.

It is important to take action as soon as you receive this notice. The longer you wait to address your tax debt, the more interest and penalties you will accrue, making it more difficult to pay off your debt over time. Applying for an IRS tax debt relief plan early on can help you avoid these extra charges and give you more time to pay off your debt in a manageable way.

When You Realize You Owe More Than You Can Pay

This year’s tax deadline passed only a couple of weeks ago, and if you’ve found yourself facing a high tax bill that you know you won’t be able to pay, it’s a good time for you to apply for a tax repayment plan. Many people are under the impression that these programs are only for those who have allowed tax debt to accrue over several years, but that’s simply not true. The IRS’s debt relief programs are for all taxpayers with tax debts they can’t afford, though the exact program you qualify for will vary based on how much you owe and your financial circumstances. Suffice it to say, however, that applying sooner is always better. You don’t have to wait until you the IRS has informed you of your debt; you can reach out to them right now to apply for a tax repayment program and get your tax debt under control from the moment it’s assessed.

When You Have a Tax Professional on Your Side

If you are unsure about when to apply for an IRS tax debt relief plan, or if you need help navigating the application process, it is best to consult with a tax professional. A tax professional can help you determine the best course of action for your individual circumstances and can also help you negotiate with the IRS to get the best possible outcome.

At the IRS Advocates, we specialize in working with taxpayers to help them manage their tax debts and apply for IRS payment plans. The best time to start getting your debt under control is now. Contact us to learn more about how we can help, and which IRS payment plans you may qualify for.