When you receive notification from the IRS about your application for a rejected installment agreement, it's not the end of the story. You have the right to appeal the decision. Upon receiving the rejection letter, call the IRS at the telephone number found on the official IRS letter. Explain why you think your installment agreement should be approved.
In simple cases, especially if the rejection was due to an error when filling out the form, you may receive an immediate response. The IRS can reject a payment plan or installment agreement for a variety of reasons. One of the most common reasons why a person provided false or incorrect information in their request. Failure to report income or making mathematical errors can result in a denial.
Another common reason is to submit a bad offer. While installment agreements are intended to help taxpayers obtain debt relief, they are also intended to help the IRS collect debts. The IRS will also reject applications from taxpayers who are going through a bankruptcy case. The taxpayer offers more than they could afford.
Taxpayers can enter into installment agreements to pay outstanding taxes. Based on the tax balance, the IRS calculates the taxpayer's reasonable revenue potential to determine how much the taxpayer should pay. But what if the taxpayer, according to the books, can't pay anything, but still offers at least a certain payment as a sign of good faith and in the hope that better financial things will come? It is possible to reinstate your installment agreement with the IRS within 30 days of receiving the CP 523 notification. A tax lawyer can help you with the initial request for an installment agreement and ensure that the proposal meets all requirements.
If your installment agreement is rejected, you might consider working with a Damiens Law tax attorney. If your installment agreement is rejected, you can first try to explain your reasoning to the IRS. If you already have an installment agreement and are struggling to pay your taxes in a future year, you may be able to renegotiate your agreement, although there is no guarantee that the IRS will approve it. You can request a transaction offer, which will help you reach an agreement with the IRS to agree on an agreed reduced amount.
Receiving this notice from the federal tax agency means that you are in danger of losing your IRS installment agreement. An installment agreement with the IRS allows you to pay the amount of taxes you owe to the IRS within an extended period of time. If you have a history of breaching installment agreements, the IRS may also deny your request for a new one. However, if they find that some of your itemized monthly expenses are unnecessary, they may decide to deny your installment agreement.
If the IRS plans to cancel your installment agreement or your payment agreement is in default, you will receive a notice of termination in the mail. The IRS Collection Appeals Program (CAP) allows you to challenge a proposed or actual termination of your installment agreement. If you apply for an installment agreement with a very low monthly payment, you may never end up paying your balance in full because the IRS must stop collecting once the statute of limitations for the collection expires. It's always a good idea to work with a licensed tax professional who has experience appealing installment agreements.
Consult a tax lawyer for help filing your request for an installment agreement or appealing the rejection of an IRS payment plan.