IRS Payment Plans and Currently Not Collectible (Status 53)

**IRS Payment plans & currently not collectible, status 53**

The most common method for paying back tax debt to the IRS and states is the monthly installment agreement. Depending on how much you owe will determine the difficulty of obtaining an payment plan. If your tax debt is below $50,000 (including tax, penalties, and interest) and you are current with your tax filings it is usually not a problem to get to a payment plan set up quickly. If the tax debt is from trust fund taxes from a business, or from a self-employed business, it may be a bit more difficult as a financial statement may need to be submitted along with proof of current estimated taxes being made if currently self-employed.

If you must submit a financial statement it is worth consulting a tax professional as there are national standards the IRS uses for certain expenses, which limits what you can claim as a monthly expense. It is worth having a professional review your financial statement to see if a payment is your best option. It is possible that an alternative option, such as an Offer in Compromise, is a much better option for you.

Another drawback to a payment plan with the IRS and/or state is that penalties and interest continue to accrue while you pay. These penalties and interest are compounded daily so you can end up paying for years and still owe more than when the installment agreement started.

Example:

James and Marry owe the IRS $50,000 in back tax debt. The couple enters into a $300 per month installment agreement, paying 8% a year in penalty and interests which adds $4,000 to their balance. After a year of payments they have a paid a total of $3,600, meaning they will owe $50,400 at the end of the year ($50,000 -$3,600 + $4,000 in penalties and interest).

If a payment plan is your best option after considering all the others, the IRS can still revoke the installment agreement if you:

Failure to file your future tax returns.
Failure to pay taxes on time.
Missing a payment.
Financial condition changes significantly.
The IRS finds that you provided inaccurate or incomplete information such as not listing all of your assets or failing to disclose other income.

Currently Not Collectible (Status 53)

If you are unable to currently afford a monthly payment plan, the IRS is able to consider your account for what is called "currently not collectible" or "Status 53" in IRS lingo. This will suspend all enforced collection action (i.e. wage garnishment, bank levies, etc.) for a period of 12-24 months. This will require submission of financial statements initially and potentially annually.

If you have questions if a installment agreement is right for you please send me an email or fill out the form to the right and I will get back with you shortly.

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Installment Agreement & Currently Uncollectible

Payment Plan & Currently Not Collectible Inquiry

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Type and Amount of Debt

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Individual Income Tax Under $50,000

Individual Income Tax Over $50,000

Wage Income

Self-Employed Income

Trust Fund Recovery Penalty

Corporate Tax Debt (e.g. 1120,941,940)

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Nicholas Hartney

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Available for all taxpayers in every state and all Expatriates living abroad.

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Areas of Practice

expat tax preparation

Foreign earned income and housing exclusions for both federal and state income tax returns. Foreign bank account reporting (FBARs), Statement of Specified Foreign Financial Assets, Tax Treaties, Application for IRS Individual Taxpayer Identification Number,etc.

business tax debt representation

We will file a power of attorney with the IRS and State Taxing Authority to negotiate a hold on all enforcement action such as bank and account receivable levies while we work on an appropriate resolution including Installment Agreements, Company Restructuring, Penalty Abatements, Offer in Compromises, and Currently Not Collectible Status. We will also advise you if bankruptcy is an option.

irs and state tax debt representation

We will file a power of attorney with the IRS and State Taxing Authorities to negotiate an appropriate resolution for back tax debt including Installment Agreements, Penalty Abatements, Offer in Compromises, Innocent Spouse Requests, and Currently Not Collectible Status. We will also advise you if bankruptcy is a option.

new business entity formation

We will educate you of the pros and cons of organizing an Limited Liability Company versus a Corporation, S-Corp., Limited Partnership, etc. and assist in the formation of the entity of your choosing.

previous years tax returns

We will prepare your previous years tax returns to bring you back into compliance with the IRS and State.

business tax return preparation

Whether you have a sole proprietorship with a Schedule C or a 1120 Corporate return we will prepare any business return.

“The hardest thing in the world to understand is the income tax.”

— Albert Einstein, physicist

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