Whether you aced it or stumbled on a few tricky questions, staying sharp on IRS installment agreements is crucial to providing the best service to your clients. Below are the answers, along with brief explanations to reinforce your knowledge.
How Did You Do?
Answers: B – B – B – C – C
1. What is an IRS installment agreement?
Answer: B) A payment plan that allows taxpayers to pay their tax debt over time
An IRS installment agreement lets taxpayers with outstanding tax debt pay it off in manageable monthly payments, easing the financial burden.
2. Who is eligible for an IRS installment agreement?
Answer: B) Any taxpayer with an outstanding tax debt
Most taxpayers who owe taxes can apply for an installment agreement, provided they meet IRS requirements and adhere to the plan’s terms.
3. What is a key benefit of entering into an installment agreement with the IRS?
Answer: B) Collection actions like levies are paused
While on an installment agreement, the IRS typically suspends more aggressive collection actions, such as wage garnishments or bank levies.
4. Which of the following is NOT a consequence of failing to adhere to the terms of an installment agreement?
Answer: C) Interest on your debt will be paused
Interest continues to accrue on the tax debt, even if the taxpayer defaults on the installment agreement. The IRS may revoke the agreement and resume collection actions.
5. What happens if you default on an IRS installment agreement?
Answer: C) The IRS may revoke the agreement and resume collection actions, such as wage garnishments or levies
If a taxpayer defaults on their installment agreement, the IRS may cancel it, and collection actions such as garnishments or levies can begin again. Interest and penalties will continue to accrue.
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