IRS Payment Plan got denied, What Are My Options?
If your IRS payment plan has recently been rejected, it’s natural to feel uncertain and concerned. This concise guide to rejected IRS payment plans and the subsequent steps outlines essential information to address your main queries:
- Reasons behind the rejection of your proposed IRS payment plan
- Alternatives available to settle your outstanding balance
- Strategies to prevent future issues with your IRS payment plans
Why would an IRS payment plan be declined?
While U.S. taxpayers are typically expected to pay their tax obligations in full by a specific deadline (April 18th for 2023), the IRS does provide an option to settle outstanding amounts through a structured payment plan.
Given the current economic conditions, a significant portion of American taxpayers (encompassing 60% of households) may find themselves needing a payment plan due to financial challenges. These plans are intended to offer relief to taxpayers; however, the IRS will only approve plans that are mutually beneficial.
In some instances, the IRS automatically approves payment plans for smaller debts. For larger or more complex debts, the IRS carefully evaluates the proposed terms. If your IRS payment plan has been declined, potential reasons include:
Reasons for IRS Payment Plan Rejection
Previous Payment Defaults
Having defaulted on IRS payments in the past makes it more challenging to persuade the IRS to accept a new repayment plan proposal. You’re viewed as a higher risk compared to first-time applicants or those with a positive repayment history.
Low Monthly Repayments
While the IRS may understand your need to settle tax debts gradually, they expect you to fulfill your obligations as soon as realistically possible, especially if you have funds available for a substantial initial payment. If low monthly payments imply an extended repayment period extending into years, the IRS is likely to reject the plan, particularly considering future tax liabilities.
Approaching Collection Statute Expiration Date (CESD)
When the collection statute expiration date (CESD) nears, the IRS may reject your payment plan proposal. Although the IRS often accepts long-term repayment plans, they will not allow debts to be written off due to CESD. If CESD is imminent, the IRS will likely demand a quicker resolution of the debt than initially proposed.
Providing Inaccurate Information
Accuracy and completeness in disclosing financial information during the IRS payment plan application are crucial. Misleading or omitting information can lead to delays and subsequent rejection due to increased perceived risk.
Explore Alternatives
If appeals and negotiations fail and immediate full payment isn’t feasible, explore alternatives like filing for bankruptcy or requesting Currently Not Collectible status. These decisions should be made with expert guidance to understand their implications fully.
Seek Professional Assistance
Tax Review Solutions specializes in IRS tax relief and can provide expert guidance on managing debt and financial obligations. Contact us today to learn more about your options and regain control of your finances.