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An IA refers to an installment payment plan for the IRS that a taxpayer files when in considerable tax debt. Sometimes a refusal for an installment payment plan comes as a shock to a taxpayer; after all, we read that the IRS basically qualifies everyone that owes less than $10,000 and that submits reasonable monthly payments. What goes wrong with your irs tax debt? Why was your proposal refused?

Whenever the IRS refuses an installment payment plan, it is usually for one or more of three reasons. First of all, you have to be current on all of your other tax returns. You cannot owe money to or currently be paying the IRS, and then expect to qualify for another installment payment plan. You may also be disqualified if there is a great deal of suspicion on your account. If the IRS thinks you are hiding property or income then they want to know why you haven’t used these assets to pay off the tax debt relief.

Another common reason for refusals is that you have underestimated how much you can pay. Yes, the IRS does analyze your account and will consider how your proposal measures up to your living expenses. If your expenses can be considered too “extravagant” then you may be disqualified for an IA plan. Some taxpayers and tax experts even report making charity contributions or sending a child to a private school can be considered extravagant expenses. Now comes the question of what do you do when you are rejected? Obviously, the debt is not dismissed so continue negotiating. You can try to speak to the collector’s manager. You can even move up in the hierarchy if you feel the person you’re talking to isn’t listening.

Remember too that if you default the payment agreement, then the IA may be discontinued and you will be forced to pay the full amount immediately. In addition to missed payments, IAs can also be canceled if it is discovered you get into further tax debt, or if it is discovered that you provided inaccurate or incomplete information. Your plan can also be canceled if your financial status improves or falls. You may have to submit a new form in order to continue the arrangement.

There are a lot of options to pursue in tax debt, even if the unthinkable happens and your proposal for an installment payment plan is rejected. For more information on options available to you visit the IRS website.