If your income tax liability to the IRS is under $25,000, you should consider an installment agreement. These streamlined agreements are available to anyone whose income tax debt is lower than $25,000 and can pay their balance in five years. The installment agreements are streamlined because if you meet the qualifications, you will enter into that repayment plan with no questions asked.
There are several advantages to an installment agreement of this type. First, it really is a streamlined process. A streamlined installment agreement with the IRS means simplicity. You just have to call, tell them you owe under $25,000, and want to pay it under five years using a streamlined process.
Second, there really are no questions asked. You do not have to fill out a financial statement, which means you do not have to provide any documentation of your finances. You do not have to disclose where you work, where you bank, or your assets. Normally when you enter into an installment agreement, you have to provide personal documents like bank statements, recent paystubs, and verification of your living expenses.
Third, since the process is streamlined and since there is no documentation required – meaning easier for you and easier for the IRS – the IRS will not apply financial standards to your living expenses. Typically, financial standards apply, which means they are likely to ask you to pay an amount which is higher than what you can realistically afford. Since you do not have to give the IRS documentation of everything, and since the process is streamlined, you will save time and money. Your payments will be less, and the hassle will be less. This is a great way to negotiate with the IRS to make the process easier on both of you and to make the IRS happy by entering into a set payment plan.