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Hi, I owe big chunk of IRS taxes from back in 2003.

Customer Question
Hi,...
Hi,
I owe big chunk of IRS taxes from back in 2003. Currently I have an agreement with IRS to pay $124 per month and it has been 22 months. I need to find out when would IRS reevaluate my financial situation, I have heard they reevaluate every 2 years, is this religiosly true? or it can vary, I want to know how do they work?
Submitted: 8 years ago.Category: Tax
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12/1/2009
Tax Professional: Robin D., Senior Tax Advisor 4 replied 8 years ago
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 16,192
Experience: 15years with H & R Block. Divisional leader, Instructor
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HelloCustomer

The re-evaluation process is usually not involved in every installment agreement made with the IRS.

Tax professionals generally prefer that a client establish an installment agreement or an offer in compromise. These are essentially contracts between you and the IRS. As long you fulfill the terms of the contracts, the IRS will not bother you. You can also opt for a partial-pay installment agreement wherein you make monthly payments. In this arrangement you end up paying less than the full amount owed. These agreements are usually easier to obtain than an offer in compromise. However, they differ from an offer or a full-pay installment agreement because the IRS may choose to re-evaluate the terms of a partial-pay installment agreement every two years. This means that if the IRS assumes that you can afford to make bigger payments, you may have to renegotiate the partial-pay installment agreement. You can request re-evaluation at any time if you find that your circumstances have changed to an extent that you can no longer make the agreed upon payment.

In short, it really depends on the exact type of installment agreement you made and was accepted.

I sincerely XXXXX XXXXX information is helpful,

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Customer reply replied 8 years ago
Robin,
let me explain, I owe around $300,000+ to irs because I made a million dollars in 2003 on paper but lost everything in january 2004, therefore I was not able to show loss. since $124 per month will not fulfill the whole amount even if I pay for 10 years, will they reevaluate my financial situation every 2 years if this is the situation?

thanks again
Tax Professional: Robin D., Senior Tax Advisor 4 replied 8 years ago

Hello again,

If you entered into a Partial Installment, which it sounds like you did, then they have the option to re-evaluate your situation every 2 years to see if more funds could be obtained from you.

You also though, can request to be evaluated again if your circumstances make it financially harmful or impossible for you to continue to make the payments in the amount first agreed upon.

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Customer reply replied 8 years ago
Robin,
so does it mean that they will reevaluate my situation exacly after 2 years or it depends on them, in addition before they reevaluate I would like to maximize the allowable standard expenses that is listed in IRS website. for example IRS allows 2 cars ownership expense not more than $972. I have 2 kids and a wife who also now works, currently I pay $350 for 1 car, we need one more car for her to go to work, can I utilize around $622 for another car that is needed, should this car be under my name, under her name or can it be under both of our's names.
my wife does not owe any taxes to IRS though, when I had aggreement with IRS, at that time she was not working, now the situation is that my salary has been increased and my wife is also making money, I want to maximize the expenses so that the expenses reflects the maximum allowed according to IRS standards.

thanks
Tax Professional: Robin D., Senior Tax Advisor 4 replied 8 years ago

If the back taxes are from a time when you filed jointl then she is on the same liablity as you. If your wife goes to work and you are increasing your income also, then I would not at this time do anything to change my status if I were you.

If the IRS should re-evaluate your situation based on the increase in your circumstances then you should be able to argue that the increase came from her working as well and the added expense of the additional car may pass with them.

The following is from the IRS' own procedures:

"

Maximum allowances for housing and utilities and transportation, known as the Local Standards, vary by location. In most cases, the taxpayer is allowed the amount actually spent, or the local standard, whichever is less.The ownership costs provide maximum allowances for the lease or purchase of up to two automobiles if allowed as a necessary expense. A single taxpayer is normally allowed one automobile. "

 

I hope this is helpful,

Robin D.
Robin D., Senior Tax Advisor 4
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