The IRS and State of Michigan have programs to help you pay outstanding tax balances. You are able to set up an installment agreement. The IRS and State of Michigan have different installment agreement programs.
An installment agreement is a payment plan to pay outstanding tax balances at a monthly rate. The IRS or State of Michigan will not pursue any further enforcement actions such as wage garnishments, levies, or property seizures as long as you comply with the payment plan. There are no penalties for paying off taxes early. You have the option of making additional or larger payments to pay off the taxes sooner. Penalties and interest will continue to accrue while in the installment agreement.
IRS Streamline Installment Agreement
The IRS has a program called Streamline Installment Agreement. This program is for tax balances less than $25,000. Before you are able to set up a Streamline Installment Agreement, you must be compliant with all IRS tax filings. This means all required tax returns must be filed. Under the Streamline Installment Agreement you can set up an arrangement to pay back the taxes in 72 months or less. You can determine the monthly payment amount by dividing the total taxes owed by the number of months requested.
There are two main ways to set up a Streamline Installment Agreement. You can call the IRS at 800-829-1040 or you set up the payment plan online at irs.gov. If you go to irs.gov, select the payment tab near the top. The next webpage has an area titled “Can’t Pay Now?” There is a link in that section for the online payment agreement.
Michigan Streamline Installment Agreement
The State of Michigan has its own Streamline Installment Agreement program. The state will agreed to an installment agreement to pay any tax balance owed in 24 months or less. The state does not put a cap on the amount of taxes owed. All tax returns are NOT required to be filed to set up a Streamline Installment Agreement with the State of Michigan. Of course, it’s advisable to have all missing returns filed so all tax balances owed are included in the payment plan.
You can request an installment agreement with the State of Michigan once your tax balance goes into collections. The tax balance will go into collections after you receive a letter titled “Bill for Taxes Due” is issued. The easiest way to set up a payment plan with the state is to call Interface at 517-241-5060 or call Michigan Accounts Receivable Collection System (MARCS) at 800-950-6227.