Understanding Default on IRS Installment Agreements: What You Need to Know

What to Do If You Default on Your IRS Installment Agreement

Have you recently entered into an IRS installment agreement to pay off your tax debt, only to find yourself struggling to keep up with the payments? You`re not alone. Many taxpayers face the same challenges when it comes to meeting their financial obligations to the IRS. In this blog post, we will explore the consequences of defaulting on an IRS installment agreement and discuss what you can do to remedy the situation.

Understanding the Consequences of Default

When Default on IRS Installment Agreement, consequences can be severe. Not only will you be subject to penalties and interest on the unpaid balance, but the IRS may also take enforcement actions to collect the debt, such as filing a federal tax lien or garnishing your wages.

Steps to Take If You Default

If you find yourself in a situation where you are unable to make your installment agreement payments, it`s important to take action immediately. Ignoring problem will only make worse. Here are some steps can take address default:

Step	Description
Assess Your Financial Situation	Take a close look at your income and expenses to determine if there are any areas where you can cut back in order to free up funds for your IRS payments.
Contact the IRS	Reach out to the IRS as soon as possible to explain your situation and explore alternative payment options, such as restructuring your installment agreement or temporarily suspending payments.
Seek Professional Help	If you`re unable to resolve the default on your own, consider seeking the assistance of a tax professional who can negotiate with the IRS on your behalf.

Case Study: John`s Experience with Defaulting on an IRS Installment Agreement

John, a self-employed individual, entered into an IRS installment agreement to pay off his tax debt over a period of five years. However, a downturn in his business caused him to fall behind on his payments. Fearing the repercussions of defaulting, he sought the help of a tax professional who was able to negotiate a new payment plan with the IRS, allowing John to get back on track with his payments without facing further penalties or enforcement actions.

Defaulting on an IRS installment agreement can have serious consequences, but it`s not the end of the road. By taking proactive steps to address the default and seeking the right assistance, you can potentially avoid the worst of the repercussions and get back on track with your tax payments.

Default on IRS Installment Agreement

It is important to have a legally binding contract in place when entering into an installment agreement with the IRS to ensure that both parties are protected. This contract outlines the terms and conditions in the event of default on the IRS installment agreement.

Contract

Parties:	Internal Revenue Service (`IRS`) and Taxpayer
Effective Date:	[Date]
Recitals:	Whereas, the Taxpayer owes a certain amount of tax to the IRS and has entered into an installment agreement to repay the debt in regular installments; and Whereas, it is important to establish the terms in the event of default on the installment agreement.
Terms and Conditions:	In event of default on installment agreement, IRS reserves right to collect entire remaining balance immediately. Default is defined as failure make scheduled installment payment. Upon default, IRS may take legal action, including imposition of penalties and interest on remaining balance. Taxpayer may request modification of installment agreement in event of financial hardship or other extenuating circumstances. Both parties agree comply with all applicable laws and regulations governing IRS installment agreements.
Dispute Resolution:	Any disputes arising out of or relating to this contract shall be resolved through arbitration in accordance with the rules of the American Arbitration Association.
Governing Law:	This contract shall be governed by and construed in accordance with the laws of the United States.

Top 10 Legal Questions About Default on IRS Installment Agreement

Question	Answer
1. What happens if I default on my IRS installment agreement?	Well, my friend, defaulting on your IRS installment agreement can lead to some serious consequences. You may face a penalty, a notice of federal tax lien being filed, or even an IRS levy on your property. It`s not a situation you want to find yourself in, believe me.
2. Can I reinstate my installment agreement after defaulting?	Yes, thankfully there is a glimmer of hope. You can apply to reinstate your installment agreement within 30 days of receiving the IRS notice of default. But, keep in mind, the IRS has to approve your request and you`ll need to get your payments back on track ASAP.
3. Will defaulting on my IRS installment agreement affect my credit score?	Ah, the dreaded credit score. Unfortunately, defaulting on your IRS installment agreement can lead to a negative impact on your credit. It might tarnish that shiny credit score of yours, so it`s best to avoid default at all costs.
4. Can I appeal an IRS installment agreement default?	Yes, indeed! You have the right to request an appeal within 30 days of receiving the IRS notice of default. It`s your chance to present your case and possibly prevent those harsh consequences from befalling you.
5. What should I do if I can`t make my installment agreement payments?	Don`t panic, my friend. If you find yourself unable to make your payments, it`s best to contact the IRS immediately. They may consider your situation and work with you to find a solution, such as a temporary delay or a modified payment plan.
6. How can I avoid defaulting on my IRS installment agreement?	Good question! The key is to stay organized and keep track of your payments. Make sure you`re aware of your financial situation and communicate with the IRS if you foresee any payment issues. It`s all about staying proactive, my friend.
7. Can I negotiate with the IRS if I default on my installment agreement?	It`s worth a shot! You can attempt to negotiate with the IRS to find a resolution, such as a new installment agreement or an offer in compromise. Just remember to approach the situation with honesty and transparency.
8. Will the IRS seize my assets if I default on my installment agreement?	Possibly, my friend. Defaulting on your installment agreement could result in the IRS seizing your assets through a levy. It`s a situation you definitely want to avoid, so it`s crucial to address any payment issues promptly.
9. What if I disagree with the IRS`s decision to default my installment agreement?	If you disagree with the IRS`s decision, you have the right to request a Collection Due Process hearing. It`s an opportunity to present your case and potentially resolve the issue before facing those daunting consequences.
10. Can I seek legal assistance if I default on my IRS installment agreement?	Absolutely! It`s never a bad idea to seek legal assistance if you find yourself in a sticky situation with the IRS. A knowledgeable attorney can provide guidance and representation to help you navigate the complexities of tax law and protect your rights.