Question 1

What Is An Installment Agreement? How Do I Know If I’m Eligible For One?

Accepted Answer

Installment agreements in South Carolina are formal repayment plans with the IRS that allow taxpayers to pay their outstanding tax debt in manageable monthly payments. Instead of facing aggressive collection actions like wage garnishment, bank levies, or property seizures, an installment agreement provides a structured way to satisfy tax obligations over time.

To determine eligibility, the IRS reviews your financial history, typically examining three to twelve months of income and expenses. They consider essential living costs such as rent or mortgage payments, utilities, food, clothing, vehicle expenses, and other necessary household expenditures. The goal is to determine your net disposable income—the amount left over after covering basic living expenses—which helps establish an appropriate payment plan.

If a taxpayer qualifies, the IRS may offer a full-pay installment agreement, where the entire debt is repaid within the 10-year collection period, or a partial-pay installment agreement, where payments are made until the debt expires under the statute of limitations. In some cases, taxpayers may also be eligible for an offer in compromise, which settles the debt for less than the full amount owed.

Entering into an installment agreement not only prevents IRS enforcement actions like levies and garnishments but also helps taxpayers regain financial stability while resolving their tax debt.

Question 2

What Are The Advantages And Disadvantages Of Installment Agreements?

Accepted Answer

When faced with tax debt, entering into an IRS installment agreement in South Carolina or North Carolina can be a practical solution, allowing you to pay off what you owe over time. However, like any financial commitment, it comes with both advantages and drawbacks that should be carefully considered before making a decision.

Advantages

Protection From IRS Collection Actions: Once you’re in an installment agreement, the IRS halts aggressive collection efforts like bank levies, wage garnishments, and asset seizures. This provides much-needed relief and peace of mind while you work on resolving your tax debt.
Predictable Monthly Payments: Instead of facing the full balance at once, you can spread out payments in a structured way that fits your budget. A well-negotiated IRS payment plan in South Carolina or North Carolina allows you to keep up with necessary living expenses while still making progress on your debt.
Flexibility To Pay Down Debt Faster: While you’re only required to pay the agreed-upon monthly amount, you can make extra payments to pay off your balance sooner. This helps reduce the overall interest that accrues over time, saving you money in the long run.
Disadvantages

Penalties And Interest Keep Adding Up: Many taxpayers assume that once they’re on a payment plan, penalties and interest stop accruing—but that’s not the case. Failure-to-pay penalties (up to 25%) and interest charges continue throughout the life of the agreement, increasing the total amount you’ll pay.
Long-Term Financial Burden: Depending on your debt amount, installment agreements can last five, six, or even ten years, meaning years of additional interest charges. If you have the ability to pay off your debt faster—either in full or with larger payments—you’ll save significantly on interest.
Risk Of Defaulting: If your monthly payment is too high and unexpected expenses arise (like car repairs, medical bills, or home maintenance), missing a payment could cause the agreement to default. This puts you back at square one, with the IRS resuming collection actions, possibly even more aggressively than before.
The key to a successful installment plan is strategic planning. Instead of committing to the highest possible payment, it’s often wiser to negotiate a lower required amount that you can comfortably afford. If you come into extra funds later, you can make additional voluntary payments to pay down the debt faster without risking default.

If you can pay the full balance upfront, it’s always the most cost-effective option, as it eliminates ongoing interest and penalties. But if an installment agreement is your best option, structuring it wisely can help you stay in compliance while minimizing long-term costs.

Question 3

How Do I Apply For An Installment Agreement?

Accepted Answer

If you owe taxes to the IRS, how you’ll apply for an installment agreement depends on the total balance you owe. For smaller amounts, you can easily request a payment plan online at IRS.gov. However, if your debt exceeds a certain threshold, you will need to call the IRS to negotiate a plan, making IRS-related debt relief in South Carolina and North Carolina considerably more challenging.

When calling, the IRS may initially propose a monthly payment amount that is higher than you can afford. In such cases, you’ll need to gather financial documentation—including income, expenses, and assets—to demonstrate your financial hardship and request a lower payment amount.

For larger tax debts or cases where the remaining collection period is short, the IRS may require a more structured approach. This could involve:

Streamlined Installment Agreement: A simple, full-pay agreement that spreads payments over time.
Partial-Pay Installment Agreement: If you cannot afford full repayment, the IRS may allow lower payments until the statute of limitations expires.
Some IRS notices now include pre-approved installment agreements outlining a monthly payment amount. If the proposed amount is unaffordable, you’ll need to provide financial documentation to negotiate a lower payment.

Question 4

How Can A Tax Resolution Attorney Help Me Negotiate An Installment Agreement?

Accepted Answer

Tax resolution attorneys in South Carolina and North Carolina play a key role in negotiating an installment agreement that aligns with your financial situation. If the IRS offers a payment plan—such as $500 per month—and you can afford it, the process is straightforward. However, if that amount is unaffordable, an attorney can help you demonstrate financial hardship and negotiate a lower payment.

Here are some key ways an attorney can help:

Determining Allowable Expenses: The IRS does not consider credit card debt as a necessary expense. Without realizing this and getting the appropriate guidance, you may struggle to reduce payments.
Weighing Financial Priorities: An attorney can help evaluate IRS collection risks versus other debts and determine the best approach.
Adjusting Agreements Over Time: Many taxpayers don’t realize they can modify installment agreements as life circumstances change. If you originally set up a payment plan years ago but now have increased expenses—such as children or medical costs—an attorney can request a payment adjustment.
Attempting to negotiate alone can be stressful, especially if you’re unfamiliar with what the IRS allows. A tax resolution attorney ensures the best possible outcome for you, minimizing financial strain while keeping you compliant with the IRS.

Question 5

How Do You Help Clients Who Feel Overwhelmed By The Length Of The Repayment Process?

Accepted Answer

One of the biggest concerns clients have when entering an IRS installment agreement is the sheer length of time it can take to pay off the debt. The idea of making payments for six, seven, or even ten years can feel overwhelming—and understandably so! Our goal is to help clients find the lowest possible monthly payment while also providing strategies to pay off the debt faster when possible.

We always aim to set up the lowest required monthly payment so clients don’t overcommit and risk defaulting if an unexpected expense comes up. But we also encourage them to make extra payments whenever they can. This way, even if the agreement is set for six years, they might pay it off in four, reducing the amount of interest they owe in the long run.

Many clients don’t realize that IRS interest is different from a typical loan. Right now, the IRS charges over 7% interest, and it compounds daily, meaning the longer the balance remains, the more expensive it becomes. That’s why we walk clients through the math—sometimes, the best financial move is to pay off the debt sooner rather than stretching it out.

We’ve even had consultations where potential clients realize they’re better off paying their IRS debt upfront because the interest cost outweighs any return they’re earning in a savings account or money market fund. In cases like that, we encourage them to pay it off directly and save thousands in interest instead of dragging out payments unnecessarily.

Another key point we emphasize is that installment agreements aren’t permanent. If a client’s financial situation changes—whether it’s losing a job, taking a pay cut, or facing unexpected expenses—we can renegotiate with the IRS. In some cases, if a client’s income drops significantly, they may even become eligible for an Offer in Compromise, which could allow them to settle their tax debt for less than what they owe.

Our ultimate goal is to minimize your stress, maximize your financial stability, and create a clear path toward becoming debt-free as efficiently as possible.

Question 6

Still Have Questions? Ready To Get Started?

Accepted Answer

For more information on IRS installment agreements, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (803) 797-4600 today.