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What to Do If You Can't Afford Your IRS Monthly Payment Plan

What to Do If You Can't Afford Your IRS Monthly Payment Plan

  • Dec 29, 2022

Man in business suit pushing 2 puzzle pieces together that read tax reliefThe IRS offer several payment plans and settlement options for taxpayers who can’t afford to pay off their tax bills. Qualifying for one of these plans can offer a great deal of relief to these individuals. But what if your monthly payment plan is still more than you feel you can afford? Or what if your financial situation changes, and the plan you’ve been on is no longer affordable for you? What options are available to you? Keep reading to learn what you should do if you can’t afford your IRS monthly payment plan.

Do Not Enter into a Payment Plan You Can’t Afford

First and foremost, if the IRS presents you with a monthly installment plan that you don’t feel you can afford, you should not agree to it. Agreeing to the terms of the payment plan, only to default on it shortly thereafter, is a far worse situation than simply rejecting the payment plan and seeking alternative options. The fact of the matter is, there are several IRS settlement options available, and if the one offered to you is truly unaffordable, you may be able to pursue another program instead.

Reach Out to the IRS and Communicate Openly

If you’ve entered into an installment agreement and can no longer afford it, you or your representative should reach out to the IRS as soon as you possibly can. This is especially important if you’re on a direct debit installment agreement; so long as the funds are in your account, the IRS will continue to remove your monthly payments, regardless of whether or not you need that money for rent or groceries. Contacting the IRS and informing them of your changed circumstances can open up resolution opportunities for you that might give you the breathing room you need.

Ask about a One-Time Skip

Oftentimes, people struggle with their monthly payment plan because of an unexpected expense or a temporary financial issue. In these situations, you can contact the IRS and request a one-time payment skip that will allow you miss a single installment without defaulting on your payment plan. Sometimes, getting this extra month to put your finances back in order after a big expense or unexpected change in finances is all a person needs to get back on their usual payment schedule.

Explore Other Tax Resolution Options

As we stated, there are other options for settling your tax debt, and you’re not obligated to accept the payment plan that the IRS offers to you. Additionally, if you have accepted an installment plan, you are not locked into that option; however, you must handle changing resolution plans in the appropriate manner. If you simply default on your agreement without opening up the appropriate lines of communication, you will be much less likely to qualify for any other resolution options.

In some cases, you may be able to adjust your current payment plan based on new financials. This would require you to submit financial information in much the same manner you did when applying for your initial payment plan. The IRS will need to thoroughly review your new financial information to verify that you genuinely cannot afford your current payment plan any longer; then they may approve you for new terms with a new, lower monthly payment.

Additionally, you can explore the option of a different settlement plan altogether. For example, if you didn’t previously qualify for an Offer in Compromise (OIC), but your financials have changed, you might qualify for this settlement option now. You can complete an application form for an OIC and submit it to the IRS and, if approved, pay off your tax debt for less than what you owe, rather than continuing to make monthly installment payments.

Work with a Tax Settlement Expert

Getting an initial settlement plan is already a challenge; the idea of rejecting or asking to modify that IRS payment plan can certainly be an intimidating one. However, if you work with an experienced professional who can advise you on the process, you may find that you can reach more agreeable payment terms with the IRS.

At IRS Advocates, we have an in-depth understanding of the requirements and qualifications for IRS settlement plans, and we can provide you with the support you need. If you find that you can’t afford your current IRS monthly payment plan, contact us today and schedule a consultation. We’ll review your current plan and your financials, then provide you with the options that are available to help you settle your tax debt.

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