Owing the IRS between $25,000-$50,000 is a big problem. In 2011, the IRS rolled out its Fresh Start Initiative, bringing more options to tax debtors in resolving their problem. One of those options was the expansion of the Streamlined Payment Plan to allow more people to more easily qualify for relief.
Streamlined
The IRS’ use of “Streamlined” is to define a payment plan that can be established without providing financial information. That means, the IRS will allow a monthly payment plan of an amount not based upon a person’s income, expenses, or assets. Currently, this streamlined option is for a total of 72 months, but it could be less if the debt is set to expire before then.
Compliance
As most resolutions, the IRS requires tax compliance to enter this payment option. Compliance is to have the last six years of tax returns on file and to be current with your tax withholding. If you do not have a filing requirement, it could be less than six years.
Payment Method
One uniqueness to this debt group is the method the IRS requires the monthly payment to be made. With lesser debt, the IRS allows mailed in payments, online payments, or over the phone payments. Those options are not available to this debt group. For this type, the IRS requires either direct debit from a bank account or a scheduled paycheck withdrawal. The paycheck method is not a garnishment, because it is agreed to through the taxpayer, the IRS, and the employer.
Tax Lien
Another benefit to the streamlined is tax lien protection. No new tax liens can be filed while on a good standing streamlined payment plan. Even further, the IRS will remove any pre-existing lien if the payment plan is in good standing for at least three months. This can help with refinancing or applying for loans.
While the streamlined payment plan has many benefits, it may not be the best first choice to make. Be sure to consult a professional to help with that determination, and if necessary, with establishing the right resolution for your situation. Give us a call 800-822-4122 to learn your options.