If you find yourself struggling to keep up with your tax payments, an installment agreement with the IRS can be a great option. The agreement allows you to pay your taxes in smaller, more manageable amounts over time, rather than in one lump sum. However, what happens if the IRS cancels your installment agreement?
The short answer is yes, the IRS can cancel your installment agreement. There are several reasons why this may happen, including:
1. You Miss a Payment: If you miss a payment on your installment agreement, the IRS can cancel the agreement. It is important to make all payments on time, or to contact the IRS if you are unable to make a payment.
2. You Fail to File Your Taxes: If you fail to file your taxes while on an installment agreement, the IRS can cancel the agreement. It is important to file all tax returns on time and to pay any taxes owed.
3. You Fail to Update Your Information: If you move or change your phone number or email address and do not update the IRS, they may cancel your installment agreement.
4. You Do Not Meet the Terms of the Agreement: If you breach any of the terms of your installment agreement, such as failing to provide financial information when requested, the IRS may cancel the agreement.
If your installment agreement is cancelled, the IRS may take collection actions against you, including garnishment of your wages or bank accounts, or filing a federal tax lien on your property.
If you find yourself in this situation, it is important to act quickly. You may be able to reinstate your installment agreement by contacting the IRS and discussing your options. You may also be able to negotiate a new agreement that better fits your financial situation.
In conclusion, while the IRS can cancel your installment agreement, there are steps you can take to prevent this from happening. Make sure you meet all the terms of your agreement and keep the IRS updated on any changes to your information. If your agreement is cancelled, act quickly to resolve the issue and avoid further collection actions.