An IRS Installment Agreement CSED: What You Need to Know
If you owe money to the Internal Revenue Service (IRS), you may have heard of an IRS installment agreement CSED. This term refers to the Collection Statute Expiration Date (CSED) on your tax debt, which is the date by which the IRS must collect the full amount of your past-due taxes or lose their right to do so. Read on to learn more about the IRS installment agreement CSED and how it can affect your payment options.
What is an IRS Installment Agreement?
An IRS installment agreement is a payment plan that allows taxpayers to pay off their tax debts over time instead of all at once. The agreement allows you to make monthly payments toward your tax bill until it is fully paid off. While you will still be charged interest and penalties on the outstanding balance, you can avoid more severe collection actions like wage garnishment or bank levies by setting up an installment agreement.
CSED and Installment Agreements
When you set up an installment agreement with the IRS, the CSED becomes an important consideration. The CSED is essentially a deadline by which the IRS must collect your debt. If the CSED passes without the IRS collecting your full tax debt, the agency loses the ability to collect it.
The CSED is generally 10 years from the date your tax liability was assessed. However, it can be extended if you file for bankruptcy, submit an Offer in Compromise, or if the IRS suspends collection activities for any other reason.
How the CSED Affects Your Installment Agreement
The CSED is important to consider when setting up an installment agreement because it can affect the length of your payment plan. The IRS will typically set the terms of your installment agreement to ensure that your debt is fully paid off by the CSED.
For example, if you owe $10,000 in taxes and your CSED is two years away, the IRS may set your installment payments to be $500 per month for the next 24 months to ensure that your debt is fully paid off by the deadline. However, if your CSED is six years away, the IRS may give you more time to pay off your debt, setting your payments at $200 per month for the next 60 months.
It`s important to note that the IRS will only set up an installment agreement for the amount of tax debt you currently owe, not including any penalties and interest. If you`re interested in exploring payment options for your penalties and interest, you may need to set up a separate agreement with the IRS.
Understanding the CSED is important when considering an IRS installment agreement since it can affect the length of your payment plan. If you`re struggling with past-due taxes, it`s important to explore all your payment options, including installment agreements. With the help of a tax professional, you can determine the best course of action for resolving your tax debt and avoid severe collection actions like wage garnishment or bank levies.