It’s frustrating when the IRS rejects your installment agreement request, but you may have a chance to salvage the situation. You can sometimes make a few small changes to improve your offer and increase the likelihood it will be accepted.
Installment agreements may be rejected for a variety of reasons, but the following are some of the most common.
Monthly Payment Too Low
The IRS expects you to pay a certain amount each month towards your tax debt. This amount is generally based on your unpaid balance, but can also be influenced by other factors.
If you ask for an installment agreement with a very low monthly payment, you may never end up paying off your balance in full because the IRS must stop collecting once the statute of limitations on collection expires.
Your offer will, therefore, be rejected in these situations. You may be able to negotiate with the IRS by submitting a Collection Information Statements that shows why you can’t afford a higher monthly payment.
Statute of Limitations is Expiring
The IRS will generally allow you to pay back your tax debt over several years. However, if you collection statute expiration date (CSED) is nearing, you may be expected to pay off your tax debt more rapidly.
Any debt that hasn’t been collected by the CSED will be forgiven and written-off by the IRS. You may be able to negotiate a partial payment installment agreement in these situations that allows you to pay what you can until the CSED comes, at which point the remaining debt is forgiven.
Partial payment installment agreements are more complicated and less common than regular installment agreements, so contact a tax attorney for assistance.
Poor Compliance History
If you’ve defaulted on a previous installment agreement, the IRS may be more likely to reject your current installment agreement. You might need to negotiate a little harder in order to convince the IRS that you’ll abide by your agreement this time around.
If your installment agreement is rejected, you can first attempt to explain your reasoning to the IRS. Your next option to submit a Collection Appeals Request within 30 days of the rejection letter.
Consult with a tax attorney to get help submitting your installment agreement request or appealing an IRS payment plan rejection.
The Gartzman Law Firm offers tax settlement help for both federal and state tax debt. Use our contact form to request a consultation with an Atlanta tax resolution attorney.