The IRS Guaranteed Installment Agreement for 2019: Explained
If you owe taxes to the Internal Revenue Service (IRS) and cannot pay the full amount owed, the IRS may offer a Guaranteed Installment Agreement (GIA) as a payment option. This agreement is designed to allow taxpayers to pay their taxes over time in installments, making it easier to manage their financial obligations.
Under a GIA, the taxpayer agrees to make monthly payments on their tax debt until it is paid in full. The agreement guarantees that the taxpayer will not be subject to any collection actions by the IRS, including wage garnishments, levies, or seizures. Additionally, a GIA will not negatively impact the taxpayer`s credit score.
There are two types of GIAs available from the IRS: streamlined and non-streamlined. The streamlined option is available for taxpayers who owe less than $50,000 and can pay off their balance within 72 months. This type of agreement does not require a financial statement or a specific payment amount. Instead, the taxpayer agrees to make regular monthly payments until the debt is paid in full.
The non-streamlined option is available for taxpayers who owe more than $50,000 or cannot pay off their balance within 72 months. To qualify for a non-streamlined GIA, the taxpayer must provide a financial statement that details their income, expenses, assets, and liabilities. The IRS will use this information to determine the size of the monthly payments.
It is important to note that there are fees associated with a GIA. The IRS charges a setup fee for both streamlined and non-streamlined agreements, and interest and penalties will continue to accrue on the unpaid balance until it is paid in full. However, a GIA is generally more affordable than other forms of debt repayment, such as using a credit card or taking out a personal loan.
To apply for a GIA, taxpayers can use the IRS Online Payment Agreement application or complete Form 9465: Installment Agreement Request. The IRS may approve or deny the agreement based on the taxpayer`s financial situation, tax history, and current tax debts. If the taxpayer does not meet the requirements for a GIA, they may be eligible for an Offer in Compromise or another form of tax relief.
Overall, a Guaranteed Installment Agreement can be a helpful option for taxpayers who are unable to pay their full tax debt upfront. By making regular monthly payments, taxpayers can avoid collection actions and reduce the financial strain of their tax debt. If you are considering a GIA, be sure to consult with a tax professional to determine if it is the best option for your unique situation.