Can the IRS Deny a Request for a Payment Plan?

On: May 26, 2023

Finding out that you owe the IRS money is enough to ruin even the perfect day. Dealing with the IRS is something most people hope they will never have to do, but if you have received a notice of tax liability, you are going to have to deal with them.

One of the biggest issues that arise with owing a tax debt is the ability to actually afford it. The IRS typically demands the payment in full and, depending on the amount you owe, you likely cannot do that.

The IRS does offer payment plans and options to ensure that you do get your debt paid off, but not all taxpayers qualify and some options may be better for some than others. Navigating these options can be confusing and hiring a tax professional is recommended as they can help you better understand what exactly you qualify for.

What is an IRS Payment Plan?

An IRS payment plan is a plan that is established with approval from the IRS that allows you to make affordable payments to pay off your tax liability. Adhering to the payment plan prevents the IRS from pursuing collection actions such as wage garnishments, liens, and levies.

During the payment plan period, you will still incur interest and penalties until you have completely paid the balance off.

Is Everyone Guaranteed a Payment Plan?

No. The IRS will determine whether you qualify for a payment plan or not. You do have to meet certain criteria to be able to apply for a plan. There are both short-term and long-term payment plan options available.

What Happens When I Apply for a Payment Plan?

The IRS will review your request for a payment plan once you have submitted it. The IRS expects you to pay as much as you can towards your tax liability. The IRS does factor in some expenses that they consider reasonable, but there are many expenses they do not recognize and they do place amount limits on the expenses as well.

You will need to decide on an amount that you can offer to pay the IRS monthly. You want this amount to be reasonable as the IRS can decide that you are not offering enough.

Once the payment plan is approved, the IRS will not pursue any wage garnishments, levies, or liens against you and you will be expected to make your payments on time monthly.

Can the IRS Deny Me a Payment Plan?

Yes. The IRS has the ability to deny a payment plan request that you submit. Some of the reasons for denial can include:

• Incomplete or untruthful information provided
• Living expenses are not considered reasonable
• Being non-compliant with current tax year filing
• Defaulting on a prior payment plan

The IRS is known to be picky when it comes to approving payment plans. At Leading Tax Group, our team can assist you in applying for and getting a payment plan approved!

What Happens if I Default on a Payment Plan?

If you default on an established payment plan, the IRS can end the payment plan agreement and require payment for the full tax liability. You may incur additional fees and penalties. You may also become ineligible for any other payment plan options in the future.

Leading Tax Group Can Help with Your IRS Payment Plan 

Having a tax liability is not something you want to ignore, even if you cannot afford it financially. There are options that allow you to pay your tax debt including payment plans. The IRS is known to be picky when accepting payment plans and may reject yours if you apply on your own.

At Leading Tax Group, our team is experienced in handling the IRS and applying our clients for payment plans. We can walk you through the process and provide you with the guidance needed to ensure you not only qualify but that the plan is approved as well.

If you need an IRS payment plan, let us help you. Call Leading Tax Group today for a FREE tax consultation.