When you find yourself on the receiving end of IRS collection enforcement for unpaid tax debt, the situation can feel simultaneously urgent and overwhelming. The agency’s aggressive tactics, like wage garnishments, bank account levies, and tax refund offsets, put immense financial pressure on taxpayers to promptly pay what they owe. However, not everyone can immediately pay off their tax liability fully. Setting up a short-term installment agreement with the IRS can provide crucial breathing room and buy you valuable time.
Pause on Collection Enforcements
Perhaps the biggest benefit of a short-term payment plan is that it requires the IRS to temporarily halt any active collection efforts against you for the duration of the installment agreement. As long as you uphold your end of the plan by making the agreed-to monthly payments on time, the IRS cannot pursue garnishments, levies, or seize assets/property during this period. This enforcement pause provides immense relief from the constant threat of collections activity.
Opportunity to Improve Your Financial Situation
By entering into a short-term agreement for 120 days or less, you gain a window of several months to work on improving your financial position. This allows time to potentially pay down other debts, increase income sources, qualify for a consolidation loan, or liquidate assets to accumulate funds to resolve your total IRS balance. The short duration keeps the pressure on to rectify your tax situation but provides that necessary interim breathing room.
Bypass Extensive Financial Disclosures
To obtain a short-term payment plan, the IRS does not require the same level of extensive financial documentation and calculations that longer-term installment agreements demand. This allows you to bypass that administrative burden in the short run. The only requirement is that your total tax debt cannot exceed $100,000, including penalties and interest.
Option for Extensions or Alterations
Should you make your short-term monthly payments but still require more time at the end of the installment period, you can request an extension for another period or alter the plan entirely. The IRS is typically more amenable to such changes for taxpayers who uphold their end of the initial short-term agreement. This flexibility provides additional time to resolve your tax debt fully.
While short-term installment agreements with the IRS don’t eliminate your existing tax liability, they can buy you the necessary time to stabilize your financial footing and avoid disruptive collection enforcement. For taxpayers needing interim relief from the IRS’s aggressive collection tactics, a short-term payment plan is certainly worth exploring and taking advantage of the extra time it allows.
Schedule a call with me today to see if a short-term installment agreement is right for you.
