Ultimate Guide to IRS Installment Agreements

Many taxpayers find themselves unable to pay their full tax balances when they file their income tax returns. Some common reasons that people might have for being unable to pay their taxes to the IRS include increased investment returns, more self-employment income, bonuses, and salary increases. When a taxpayer is unable to immediately pay his or her tax debt, making payment arrangements will likely be necessary.

The most common type of payment arrangement taxpayers can make to take care of their tax balances is an installment agreement. With this type of arrangement, taxpayers will make monthly payments to the IRS. In most cases, the payments are made by payroll deductions or direct debits. The set-up fee for a direct debit agreement made online is $31. If the direct debit installment agreement is created over the phone, in-person, or by mail, the set-up fee is $107. Fees can be waived for low-income taxpayers.

If the taxpayer enters into an agreement to pay by other methods, the online set-up fee is $149. If the application is made in-person, over the phone, or by mail, the set-up fee is $225. Low-income taxpayers will be charged a set-up fee of $43.

During the installment agreement, late-payment penalties and interest will continue to accrue. However, the late-payment penalties will be halved during the months during which an installment agreement is effective. Installment agreements can be set up by calling the IRS, using the online payment agreement or OPA tool, or filing form 9465. Here is a guide to what you need to know about IRS installment agreements.

Understanding IRS installment agreements

Taxpayers are responsible for meeting their obligations when they owe outstanding tax liabilities to the government. When a tax liability is overdue, the taxpayer will incur monthly late-payment penalties and added interest. To avoid added charges, taxpayers are advised to pay their balances in full. However, some taxpayers are not able to do so. When taxpayers cannot pay what they owe in full, the IRS allows them to enter installment agreements to make monthly payments.

Taxpayers have the following options when they make payments:

  • Payroll deductions
  • Direct debits
  • Payments through the Electronic Federal Tax Payment System
  • Credit card payments
  • Check or money order payments
  • Payment by the OPA

 

Streamlined IRS Installment Agreements

Streamlined installment agreements are available to individual taxpayers who owe less than $50,000 under IRM 5.14.5.2. This includes all unpaid assessments but does not include … Continue reading

Tax Resolution Marketing Letter: Why it works

In marketing parlance, your most successful marketing piece, the one that becomes your lead generation workhorse, is called a control.

Over the past couple hundred years, there have been a number of marketing controls that have had incredibly impressive runs. Two of the most famous examples from recent times:

  1. The Wall Street Journal’s “Two Young Men” letter, generated nearly $2 billion dollars in sales for the Journal during it’s 29 year run. It was mailed continuously by the Journal to select household mailing lists from 1974 to 2003. It is considered the single most successful direct mail sales letter in history, and is well worth studying.
  2. Self-help guru Tony Robbins has one infomercial that ran continuously in English speaking countries around the world for 18 years. It was literally broadcast 24 hours per day, always available on at least one basic cable channel or over the air broadcast network. Although at much lower volume, that infomercial still runs today. The infomercial sells his flagship “Unleash The Power Within” program, and to this day sales from that program generate $9 million per year in net profit for him.

ControlLetter-1 The power of a control piece cannot be underestimated. Having a solid control, along with a well-defined target market to send or broadcast it to, is almost like an ATM that prints free money.
In 2012, I wrote what would become my direct mail control piece. I affectionately refer to it as the mug shot letter. This letter was the workhorse of my practice, across multiple niche tax resolution markets and a variety of different offers. It worked well for me in the western US, and it’s worked well for coaching clients from Texas to Florida to Chicago in it’s original form. Other practitioners have created heavily modified derivatives that work very well for them, including a CPA in Maine that created a version that has helped take his tax resolution business from just a few thousand dollars in 2013 to over $250,000 in 2015.

Last year, when my postcard sequence to drive people to a webinar wasn’t delivering the results I wanted, I went back to this letter, and results immediately improved.

The obvious question is: Why does this letter work?

Let’s step through it to see why. Tax Resolution Academy® members can download the letter from the tax resolution marketing library.

1. It shows a real human being.

The first thing most … Continue reading

Marketing cost comparison for reaching $1 million

I recently released the 5th edition of my book about building a million dollar taxpayer representation firm, and one of the things I addressed in this edition is the concept of stepping up your marketing expenditures in logical increments.

As I was thinking about this, it dawned on me that many existing IRS representation practitioners probably think that it’s cost prohibitive to build a practice that size by using the kind of marketing that I advocate doing. Due to this line of thinking, they instead do what “tax resolution” firms do: Hire an army of telephone openers and closers to cold call tax liens.

Not only is this practice a violation of Treasury regulations, it’s also one of the practices that gives a black eye to all of us engaged in taxpayer representation. Companies use this boiler room telemarketing approach for an obvious reason, of course: It works.

This leads practitioners to think it’s more cost effective to do business this way. But is it really?

What does it take to hit $1 million in new client fees annually? Grab your calculator, folks…

Assuming an average fee of $3,500 per client (which is actually on the low side, but it never hurts to be conservative), we need 285 clients per year to hit the magic million mark.

Now, you’re going to have to take my word for it on these conversion numbers — but I can assure you they are based on real life experience in real tax firms, not just on conjecture. The average telemarketer (“opener”) must dial 60 tax liens in order to find one interested person, who is transferred to a sales closer in most boiler room operations. This closer will close, on average, 9% of these prospects. So, in order to get ONE new client, a company has to churn through 660 tax lien filings, at a typical cost of 35 cents per record to purchase. So, that’s $231 just in lead costs.

Now, the opener also typically gets a 10% commission at most companies, and the closers receive, on average, 20% to 30%. Lets’s again be conservative, and together give the sales guys 30%. Note here that we are also ignoring minimum wage laws and other costs for this sales staff, which most firms do ignore, believe it or not. So our $3,500 new client also costs us $1,050 in commissions, for a total of $1,281 that we Continue reading