Once you miss an installment agreement payment, you run the risk of having your plan terminated. You do have a chance to fix things before this happens, but you’ll need to work with the IRS and correct the default.
What is a default? A missed payment qualifies, but so does failure to keep up with current tax obligations. If you fail to file a return or pay estimated taxes, this could be considered a default, even if you are making your IRS installment agreement payments.
Late Payment Notice
First, you’ll receive an IRS notice stating that you missed a payment. This notice generally asks you to correct the default and gives you 30 days to get your payment plan back on track.
The notice also informs you that your plan can be terminated if you don’t act within 30 days. If your plan is terminated, the IRS can levy your bank account, garnish your wages, or take any other enforced collection action.
You have a few ways to correct the default and avoid these collection methods.
Correct the Default
You can simply pay the amount of the missed payment to correct the default. However, you also need to make sure your plan is reinstated, which could require you to pay a reinstatement fee.
If you need assistance with this process, contact a tax attorney.
You have the option of renegotiating your payment plan. However, if you want to lower your monthly payments, you may need to complete another collection information statements that shows how your finances have changed. Supporting documentation may also be required.
If you lost your job or had a change in circumstances, you might qualify for lower monthly payments. However, you may end up paying more in penalties and interest in these situations.
You have the right to appeal a payment plan termination. Not only do you get 30 days from the late payment notice before the IRS takes enforced collection actions, but your assets and wages are also safe while an appeal is pending.
However, delaying the IRS collection actions is only a stop-gap measure. You need to develop a strategy that offers a more permanent resolution to your tax problems. The additional time you receive while an appeal is pending allows you to consult a tax attorney to figure out your options.
Get help with IRS tax debt problems by calling The Gartzman Law Firm at (770) 939-7710. We can help stop bank account levies and wage garnishments before they happen and find a creative solution to your tax problems.