Your Public Defender against the IRS when you need tax debt relief . . .
Serving clients in New York, New Jersey and Connecticut
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Jersey City, NJ 07311
Payments Against Tax Debt
In plain language, if there's no way you can pay all that you owe within the ten year period for collections, you'll pay what IRS determines you can pay until the ten years are up.
- The closer you are to the end of the collection period, the better off this deal is.
- In fact, the PPIA is effectively an Offer in Compromise, with none of the disadvantages, such as a 20% non-refundable payment.
How does this work? Let's say you owe IRS $240,000 going back to 2003. The IRS has ten years to collect, the Statute of Limitations.
You have so far managed to avoid paying anything substantial on this debt.
- Perhaps you moved around a lot, or were unemployed.
But, the IRS has caught up with you and demands payment.
- You cannot pay the balance in full, but depending upon your income you can pay, say, $500 per month for the next 24 months.
- With a PPIA you will pay a total $24,000 in satisfaction of a $240,000 tax debt.
- That's a ten percent Offer-in-Compromise.
What's happening here?
- You are NOT escaping the IRS by any means.
- But if there's only so much money available to pay IRS, they cannot squeeze more out of you.
Now, if in this example, you are in the eighth year of the collection statute, and in two more years, they can't collect at all, well, IRS will give it their best shot and collect from you for the next 24 months - - two years.
The statute of limitations on collections is ten years. That's all. If you are close to the end of that statute and IRS finally catches up with you, you'll pay. But you'll not pay the full amount if you just don't have that kind of money. So, you effectively get an “Offer in Compromise”: you've just got rid of a lot of tax debt - - legally.
IRS must consider a PPIA in all cases where an Offer in Compromise is being rejected.
Not many so-called Tax Experts are even aware of this tool.
Also, for the IRS this is actually a good deal. They get to collect some portion of the tax.
How does this differ from an Installment Agreement? Good question. An Installment Agreement will only be granted if the Taxpayer can full pay the liability in 60 months, five years. There is the requirement to fully pay the debt. With the PPIA the debt is by design NOT fully paid.
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