If you owe federal taxes but are unable to pay your balance all at once, the Internal Revenue Service (IRS) offers several options to help you settle your debt. One such option is the Federal Tax Installment Agreement (FTIA).
An FTIA allows you to pay your tax debt in smaller, more manageable payments over time. The agreement is available to individuals, businesses, and even self-employed taxpayers who meet certain eligibility requirements.
One of the most significant benefits of an FTIA is that it can help you avoid more severe collection actions like wage garnishment, levies, or property seizures. By setting up an installment agreement, the IRS will typically stop all collection actions and will not take any additional enforcement actions while you are making payments.
If you are interested in setting up an FTIA, you can either apply online or by mail through the IRS website. The online application process is relatively straightforward and takes approximately 30 minutes to complete.
To qualify for an FTIA, you’ll need to provide the IRS with information on your financial situation, including your income and expenses. Based on this information, the IRS will determine your monthly payment amount, which will typically be based on your ability to pay and the total amount you owe.
It`s also worth noting that there are fees and penalties associated with an FTIA. For example, you will be charged a one-time setup fee of $31, which will be added to your total tax balance. In addition, interest and penalties will continue to accrue on your outstanding balance until it`s paid in full, so it`s essential to keep up with your payments to avoid additional charges.
If you`re considering an FTIA, it`s crucial to note that the IRS does have the authority to revoke the agreement if you fail to make your payments or if you fail to file your tax returns. In such cases, the IRS can resume collection actions, including wage garnishments, liens or levies.
In conclusion, if you`re struggling to pay your federal taxes, an FTIA can be an excellent option to help you manage your debt. By setting up a payment plan, you can avoid more severe collection actions and get back on track with your tax obligations. Just remember to keep up with your payments to avoid additional fees and penalties.