Installment agreement

[Wickel]

What is the name of your state (only U.S. law)? New Mexico


I've been negotiating an installment agreement with the IRS since last November. Today, I received their decision and it wasn't good for me. I owe $72,000 in back taxes and they want a monthly installment of $1,163 for 60 months. There figures are based on my gross income, which is about $3,400 a month (I work for state government in New Mexico) and not net. But the bottom line is, I only clear about $2,500. After all the basic expenses, I calculated that I would be left with about $300 a month if I entered their installment agreement. Now this doesn't include food, gas, emergency money, etc. The problem, as I see it, is how they base their resolution, which is on the gross salary. But after insurances, taxes, retirement, I only clear $2,400. What can I do in this situation? Am I allowed to negotiate beyond 60 months? What other options are there. Thanks in advance for any help.

[Stevef]

Originally Posted by Wickel

After all the basic expenses, I calculated that I would be left with about $300 a month if I entered their installment agreement. Now this doesn't include food, gas, emergency money, etc.

Your basic expenses don't include food?

[LdiJ]

Originally Posted by Wickel

What is the name of your state (only U.S. law)? New Mexico


I've been negotiating an installment agreement with the IRS since last November. Today, I received their decision and it wasn't good for me. I owe $72,000 in back taxes and they want a monthly installment of $1,163 for 60 months. There figures are based on my gross income, which is about $3,400 a month (I work for state government in New Mexico) and not net. But the bottom line is, I only clear about $2,500. After all the basic expenses, I calculated that I would be left with about $300 a month if I entered their installment agreement. Now this doesn't include food, gas, emergency money, etc. The problem, as I see it, is how they base their resolution, which is on the gross salary. But after insurances, taxes, retirement, I only clear $2,400. What can I do in this situation? Am I allowed to negotiate beyond 60 months? What other options are there. Thanks in advance for any help.

You are going to have to downsize...and perhaps not contribute to your retirement fund until you have paid off your back taxes, unless you have some other option for paying off the IRS.

[tranquility]

Unless you qualify for an offer in compromise, you are SOL. If you don't pay, they will levy your accounts, take your stuff and garnish your wages. Really, they will. I've seen it. Except in the case of a tax bill under $10,000 which is to be paid in 3 (or is it 5?) years, the IRS does not have to accept your installment request.

Stand by for irsos for further. He does this kind of work.

[TinkerBelleLuvr]

How is it that you landed up owing the IRS so much money?

[Some Random Guy]

The retirement contribution has to go. Uncle Sam will not wait for its money while you pad your 401k.

[tranquility]

And, if it doesn't go, they will take it.

[davew128]

Originally Posted by tranquility

And, if it doesn't go, they will take it.

While I agree that legally they CAN levy a retirement account, I know that an involuntary levy (as opposed to telling them to go in and take it) is something that has to go pretty high internally for the service to get approval to do.

OP, you're approaching this the wrong way. When you do your financial statement disclosures, taxes in your paycheck ARE considered in whats available. As others have pointed out, trying to save money for retirement while you have a LARGE unpaid tax bill
is how shall I say it, STUPID.

[Wickel]

Any employee of the State of New Mexico is required by law to contribute to the Public Employees Retirement Association (PERA). If you want to work for the state, contributing to PERA is mandatory. Basically, what I'm trying to ascertain is whether extending the IRS collection cycle beyond 60 months is an option.

[tranquility]

To the OP, anything you can negotiate with the IRS is an option. However, they are not required to accept your offer and can initiate collection procedures.

While I agree that legally they CAN levy a retirement account, I know that an involuntary levy (as opposed to telling them to go in and take it) is something that has to go pretty high internally for the service to get approval to do.

I agree it is rarely done. However, the IRS is not going to leave $72K on the table when there is a big old pile of money in the taxpayer's control. Sure they'll take other assets first. Then, after the amount is lowered they may take an installement plan. But a person who continues to fund his retirement when he has a big tax debt out there will have things get pretty high internally.

[irsos]

Originally Posted by Wickel

What is the name of your state (only U.S. law)? New Mexico


I've been negotiating an installment agreement with the IRS since last November. Today, I received their decision and it wasn't good for me. I owe $72,000 in back taxes and they want a monthly installment of $1,163 for 60 months. There figures are based on my gross income, which is about $3,400 a month (I work for state government in New Mexico) and not net. But the bottom line is, I only clear about $2,500. After all the basic expenses, I calculated that I would be left with about $300 a month if I entered their installment agreement. Now this doesn't include food, gas, emergency money, etc. The problem, as I see it, is how they base their resolution, which is on the gross salary. But after insurances, taxes, retirement, I only clear $2,400. What can I do in this situation? Am I allowed to negotiate beyond 60 months? What other options are there. Thanks in advance for any help.

Yes, payment can extend beyond 60 months if your situation warrants it. It sounds like you may be a candidate for an offer in compromise or a partial pay installment agreement. This assumes you are require to pay into the retirement system and have no access to the funds for at least 5 years.