IRS Payment Plans and Agreements

The IRS offers a variety of payment plans to help taxpayers pay off their back taxes. These programs differ; you may receive a free installment plan or a pricier one. See below for more information on the various types of IRS payment plans and how you can benefit from them.

What is the IRS Payment Plans?

An IRS payment plan is an agreement between the IRS and the taxpayer to pay the taxes outstanding within a specific time frame. The IRS offers these plans to taxpayers who have owed taxes for up to ten years and provides them with a period and payment plan that is appropriate for their eligibility. IRS payment plans are classified into two types: short-term payment plans and long-term payment plans.

These payments are often made monthly for a fixed amount. If the arrangement is for more than 120 days, there is also a setup cost. The IRS offers several options for applying for these payment arrangements. Here is how to apply:

IRS Payment Plans
  1. Online Payment Agreement Application: The Online Payment Agreement application is the first and most convenient way to apply for an IRS Installment Agreement Plan. If the total combined amount of all your individual income tax, penalty, and interest owed is $50,000 or less, there is no setup cost for the online application. On the application, there are short-term payment options for 120 days or fewer, as well as monthly payment plans. This application is also available for businesses that owe less than $25,000 in total payroll taxes, penalties, and interest for current or previous tax years. When you apply for the Online Payment Agreement Plan, you will receive an immediate response from the IRS. It will immediately inform you whether your application was approved or denied by the IRS.
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  2. Application by Phone: You can also apply for payment plans over the phone. To apply over the phone, dial 1-800-829-1040. If you apply by phone, the IRS may request proof of your financial situation. Make sure you have all your documentation and financial information ready before calling.
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  3. Application by Mail: You can also apply for a payment plan by mailing the IRS the necessary documents. For the application, you must submit Form 9465 to the IRS. In addition, if you want to deduct your payment through payroll, Form 2159 is required. If you owe more than $50,000 in total, you must file Form 433F. All these forms must be mailed to the IRS address listed on your bill. The IRS allows applicants who apply by mail to reduce the accrual of fines and interest by making voluntary payments until their application is granted.
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  4. Application In-person:  The final option for applying for the Installment Agreement Plan is to visit an IRS office in person. You must bring all your documentation and have access to your financial information for the in-person application.

When it comes to the various plans that you might apply for, the short-term payment plan is a 180-day or shorter arrangement. This plan is free if you apply online, via phone, by mail, or in person. The highest amount you can owe the IRS under this plan is $100,000, which includes tax, penalties, and interest. Moving on to the long-term plan, the agreement can be for 120 days or longer. This package has various setup fees based on the payment type you pick. If you pay by automatic withdrawal, it costs $31 to apply online and $107 to apply by phone, mail, or in person. These costs change if you pay through a different method: applying online costs $149 while applying by phone, mail, or in-person costs $225. Keep in mind that if the applicant is considered low-income, these charges will be reduced.

How to Seek Professional Help?

IRS Payment Plans

Back taxes can be the most stressful and daunting scenario to deal with. It would take hours of research and a lot of effort to fill out all those paperwork in order for you to come up with a payment plan and choose the best possibilities. The best choice is to hire an experienced Miami Tax Accountant to complete all these forms and advise you on the best payment plan.

SDG Accountants is a tax and accounting firm located in downtown Miami, and we are the top tax accountant in Miami for all your tax and accounting needs. We help small businesses and individuals expand their businesses.

Contact us by phone at +1 (786) 706-5905 or by email at admin@sdgaccountant.com.

You can also schedule a free initial consultation with us by clicking on the following button:

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What Happens If I Do Not File or Pay my Payroll Taxes?

Payroll Taxes

When it comes to unpaid taxes, the IRS is a little harsher on corporations than on individuals. Businesses owe more taxes and are more involved in tax administration than individuals. People who owe taxes are treated harshly by the IRS, who consider it a significant infraction and a serious felony. They are unconcerned with an individual’s or a business’s financial situation, whether they have declared bankruptcy or are deeply in debt; all they worry about is that you pay the taxes you owe. Payroll taxes are the most strictly enforced by the IRS of any sort of tax. They are highly concerned about unpaid payroll taxes and have hefty penalties for late payment.

A company that receives payroll taxes from its employees is obligated to pay those taxes on their behalf. If a company fails to pay its taxes, it is considered fraudulent and is dealt with accordingly.

What are Payroll Taxes?

Payroll Taxes

All businesses must submit all accurate information to the IRS, make monthly payments to the federal payroll tax department, and file informational returns. The company is obligated to provide a W-2 Form to all workers and a Form 1099 to any individual contractors so that they may identify how much they were paid and what deductions and bonuses they received. All businesses must also use the IRS-created Electronic Funds Transfer (EFT) system to deposit Medicare and Social Security taxes for their employers and employees. This deposit can be made monthly or semi-weekly and is based on forms from past years, such as Form 941. If your employer has more than $50,000 in tax withholding each year, they must deposit semi-weekly, and those with less than $50,000 in tax withholding must deposit monthly. The IRS will determine the frequency of your deposits, and you will be notified.

Businesses must also pay Federal Unemployment Tax Act (FUTA) tax each quarter if their total salaries paid for the quarter exceeded $1,500. In terms of all the forms and their functions, Form 940 is used to report your FUTA tax. Other forms include Form 941 or Form 944.  On a quarterly basis, Form 941 is used to report employee wages, employer withholdings, and Medicare and Social Security taxes. Form 944 is the same as Form 940, however, it is reserved for employers with annual tax withholding of less than $1,000 per year.

What happens when a business fails to pay or file its Payroll Taxes?

When a company fails to pay its taxes, particularly its payroll taxes, it is not a minor issue. Many firms get into financial difficulties and are forced to postpone paying their taxes. This results in a failure to submit a penalty of 5% every month, with a maximum penalty of 25%. Other steps that the IRS could take include levying or enforcing a levy or lien on the bank accounts of businesses or individuals.

How to Solve this Problem?

This is a significant situation that might be difficult to handle. The first step you could take is, of course, to pay your taxes if you can find the money, but if you can’t, here’s what you need to do. If it is completely difficult for you to pay your taxes, you can request extensions. The IRS is often able to be patient and provide you with a time period and a plan for paying these taxes. If you are unable to do so, do not wait for the IRS to come knocking on your door; instead, get assistance. Seek expert assistance from a Miami Tax Accountant who has dealt with similar issues and assisted individuals and organizations in dealing with them efficiently.

Any form of tax problem necessitates the assistance of a professional. Allow the pros to handle the process of owing payroll services, which can be difficult and intimidating. We can assist you in sorting through your options and determining the best solution and payment plan for you. Our team consists of Tax Preparers in Miami who have been dealing with issues like these for years and have solved them effectively. Be a part of our happy clients and let us take care of all your tax concerns.

All you have to do is reach out to us; you can email us at admin@sdgaccountant.com or call us: +1 (786) 706-5905.

Being Audited by the IRS

IRS

IRS audits are uncommon, but they can be extremely harmful if not handled properly with appropriate representation and proof. Many taxpayers become terrified when they hear the words “audit,” particularly “IRS audits,” since it takes their breath away. However, many people are unaware that IRS audits are not as awful as they believe. You must ensure that you specify the sort of audit requested, and you will be able to make sense of all the misunderstandings.

Types of IRS Audits:

The IRS can conduct a variety of audits, many of which do not need a visit to your home. To begin, let us define an IRS audit. An IRS audit is essentially an assessment of an individual’s or an organization’s financial statements and all financial information to ensure that all income and tax forms are appropriately recorded. Its primary purpose is to ensure that you are reporting the correct amount on your tax forms to be taxed. The IRS can conduct three sorts of audits to verify your tax information: correspondence audits, field audits, and office audits. Let’s take a good look at those audits and see what you can do to deal with them effectively.

Correspondence Audits:

IRS Audit

Correspondence audits are audits that are conducted exclusively through the mail. They are the simplest type of audit to deal with because they do not focus on large areas of your financial records, but rather on minor problems on your tax return and tax forms.

The IRS can send you two sorts of letters in the mail to finish the audit. The first is a simple letter informing you that you owe money to the government. A simple letter can be sent if there is an error on your tax return; for example, the IRS will notice if you declare the wrong income by mistake. For example, if you only record $3,500 of your $4,000 income, you will be required to pay taxes on the remaining $500.

If you receive a letter like this from the IRS, the first thing to do is not panic. Accepting that you made a mistake and paying the amount owed, whether it is taxes, interest, or penalties, is a straightforward answer. However, if you do not believe you made an error and wish to dispute, you may do so by asking for further examination, which can be done over the phone or by mail. To ensure that you follow the proper measures while dealing with the IRS, consult with a tax accountant who can assist you assess the issue and professionally represent you to the IRS. Schedule a consultation right away with our Miami Tax Accountant!

An audit letter, which requests specific paperwork and proof to validate the deductions made on your tax return, is another sort of letter that the IRS may send. The IRS requires actual proof that demonstrates your deductions are genuine, such as a cancelled check for a deductible expense. All you have to do to address this problem is provide the appropriate paperwork to the IRS, making sure to send a copy rather than the original. If you are unsure about which documents to send, it is usually better to call a tax accountant, such as SDG Accountants, and ask their assistance in resolving this situation.

If you do not have the paperwork and hence cannot provide confirmation of the deduction, you can simply pay a fee to have your audit cancelled. However, if certain taxpayers wish to further argue and pursue the issue, they may do so via mail. Remember that if you hired a tax accounting firm to complete your return, they can serve as your perfect representative to the IRS and resolve the issue for you on an hourly basis.

Field Audit:

A field audit is a physical visit by the IRS to your home, place of business, or the office of your accountant. This is a significant audit because an IRS agent will come to your door and demand an answer in person. Many of these audits are more likely to occur if you operate a business than if you are an individual. In instances like this, you must consult a tax accountant who can represent you before the IRS. It is difficult to deal with the IRS on your own; you require the assistance of a professional who can counsel you wisely and negotiate with the IRS on your behalf.

Office Audit:

IRS Audit

The IRS may want to question you in person during an office audit. This form of audit is severe because it forces you to deal with the IRS in a professional setting face to face. You will receive a letter in which you will be asked to appear at a specified location on a specific date and at a specific time. If you are unable to attend the appointment, you can reschedule it by contacting the IRS.

It is critical in instances like this to bring a tax preparer or a tax professional with you who can represent you to the IRS. A regular taxpayer does not have the same level of expertise as a tax preparer or tax attorney; the IRS is very sophisticated and talking with them is difficult. You might become nervous and say things that should be kept confidential, which is why you need the assistance of a Tax Preparer.

How to Respond to IRS Audits?

SDG Accountants comprises tax professionals who are experts in dealing with the IRS; we can assist you in navigating the audit and communicating with the IRS on your behalf. All you have to do is use our consultation calendar to schedule an appointment with us and explain your position to our accountants and tax professionals. From that point on, it is not only your problem but also ours, to address the problem efficiently. Now is the time to schedule a consultation!