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Can You Have Two Payment Plans With The Irs

Can You Have Two Payment Plans With The IRS?

Dealing with tax debt can be a stressful and overwhelming experience. If you find yourself unable to pay your tax bill in full, the Internal Revenue Service (IRS) offers various payment options to help you resolve your tax debt. One common question that arises is whether it is possible to have two payment plans with the IRS. In this article, we will explore this topic in detail and provide valuable insights to help you navigate your tax debt situation.

Understanding IRS Payment Plans

Before delving into the possibility of having two payment plans with the IRS, it is important to understand the available options for resolving tax debt. The IRS offers several payment plans, including:

  • Installment Agreement: This is the most common payment plan option, allowing taxpayers to make monthly payments over an extended period of time.
  • Offer in Compromise: This option allows taxpayers to settle their tax debt for less than the full amount owed, based on their ability to pay.
  • Currently Not Collectible: If you are facing financial hardship and cannot afford to make any payments, the IRS may temporarily suspend collection activities.

Can You Have Two Payment Plans?

The IRS generally does not allow taxpayers to have two simultaneous payment plans for the same tax debt. However, there are situations where you may be eligible for a second payment plan. Let’s explore these scenarios:

1. Modification of Existing Payment Plan

If you already have an existing payment plan with the IRS but are unable to meet the agreed-upon terms, you may request a modification. The IRS may consider modifying your payment plan based on changes in your financial situation, such as a decrease in income or an increase in necessary expenses. It is important to contact the IRS as soon as possible if you are facing difficulties in meeting your payment obligations.

2. Additional Tax Debt

If you incur new tax debt while on an existing payment plan, the IRS may allow you to add the new debt to your current plan. This can help streamline your payments and avoid the need for a separate payment arrangement. However, it is crucial to inform the IRS about the new tax debt promptly to ensure compliance and avoid potential penalties.

3. Combination of Payment Plans

In some cases, the IRS may allow taxpayers to combine different payment plans to address multiple tax debts. For example, if you have both individual and business tax debts, you may be able to combine an installment agreement for your individual taxes and an offer in compromise for your business taxes. This can simplify your payment process and make it more manageable.

Frequently Asked Questions

1. Can I have two separate installment agreements for different tax years?

No, the IRS generally does not allow separate installment agreements for different tax years. However, you may be able to combine multiple tax debts into a single installment agreement.

2. Can I have an installment agreement and an offer in compromise at the same time?

In most cases, the IRS does not allow taxpayers to have an installment agreement and an offer in compromise simultaneously. However, if your offer in compromise is rejected or withdrawn, you may still be eligible for an installment agreement.

3. Can I modify my existing payment plan if my financial situation changes?

Yes, if your financial situation changes, such as a decrease in income or an increase in necessary expenses, you can request a modification of your existing payment plan. Contact the IRS as soon as possible to discuss your options.

4. What happens if I incur new tax debt while on an existing payment plan?

If you incur new tax debt while on an existing payment plan, you should inform the IRS promptly. The IRS may allow you to add the new debt to your current plan, avoiding the need for a separate payment arrangement.

5. Can I combine different payment plans for individual and business tax debts?

Yes, in certain situations, the IRS may allow taxpayers to combine different payment plans for individual and business tax debts. This can simplify the payment process and make it more manageable.

6. What should I do if I am unable to meet my payment obligations?

If you are unable to meet your payment obligations, it is crucial to contact the IRS as soon as possible. The IRS may be able to offer alternative solutions, such as modifying your existing payment plan or temporarily suspending collection activities.

Summary

While the IRS generally does not allow taxpayers to have two simultaneous payment plans for the same tax debt, there are situations where you may be eligible for a second payment plan. These include modifying an existing payment plan, adding new tax debt to an existing plan, or combining different payment plans for multiple tax debts. It is important to communicate with the IRS and explore your options if you are facing difficulties in meeting your payment obligations. Remember, seeking professional advice from a tax professional can provide valuable insights tailored to your specific situation.