Venar Ayar, Tax Defense Attorney
If you the IRS back taxes, an installment agreement may be the way to go.  They are easy to set up, easy to get approved for, and if you set them up right – easy to stay compliant with.  However, in spite of all of this, people still make mistakes with their installment agreement that cause them to default and land them back into collections with the IRS.  So we decided to outline some of the most common mistakes people typically make when entering into an IRS installment agreement and ways to avoid them.  Here they are.
1.) Agreeing to Pay More Than They Can Afford

This is a mistake, as tax pros, that we see often. I am not sure if it’s people’s natural fear of the IRS or maybe they’re overeager to pay off their tax debt but for whatever reason, when setting up their installment agreements, people tend to agree to pay way more (per month) than they can afford.  As someone who deals with the IRS on a daily basis, I can tell you that if you are afraid of the IRS and think that you need to agree to pay more or otherwise they may hound you, you need to take that fear and that belief and throw it in the garbage where it belongs.  At the end of the day, when you are dealing with the IRS, you are really just dealing with other humans.  They aren’t robots without feelings.  They are not out to get you.  And they understand that people make mistakes.  They want to help (as long as you haven’t done anything illegal of course).  And if you go to them and explain “yes, I know I made a mistake but I would like to rectify that,” they will do everything in their power to help you.  That includes setting up a payment plan that works for you.  So before you make that call, sit down and take a look at your monthly expenses and income and really do the math and think about a reasonable amount you can afford to pay them each month and still afford to get by.  If you can’t afford to pay them anything, then you probably qualify for Currently Not Collectible (CNC) status and you should look into that instead of an installment agreement.  At the end of the day, the IRS will just be happy that you have taken steps to remedy the situation – however much you decide to pay each month.

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