December 15, 2022
Will the IRS Take Payments In Cryptocurrency
Will the IRS Take Payments In Cryptocurrency?
With the IRS cracking down on taxable cryptocurrency transactions, may may wonder if the agency will also take payment in cryptocurrency.
The short answer: No. The IRS doesn't accept Bitcoin (BTC), Ethereum (ETH), or any other virtual currency, according to an agency spokesperson.
The IRS will only accept payment in US Dollars. Therefore, it also doesn't accept euros, pounds, or other foreign currency payments. The IRS does however, accepts cash, personal check and credit cards.
If your tax bill is too much for you to pay in a single payment, you have options. The IRS has Installment Agreement plans to spread your payments over several years. While having an IRS debt is stressful, having an installment agreement can make it more manageable.
Consider the alternatives. If you fail to pay in your tax debt in full or agree to a payment plan, the IRS can seize your property, place a lien against your property, garnish your wages, or seize your bank account.
The IRS has five different plans to choose from. One of them should fit your situation.
5 Types of IRS Installment Plan and Agreements
1. Guaranteed Installment Agreement
A guaranteed installment agreement will be approved if you owe $10,000 or less to the IRS and you meet the criteria;
- All tax returns have been filed.
- Your previous five years' returns cannot have been filed or paid late.
- Not received an installment agreement within the previous five years.
- You can pay the outstanding debt within three years or less.
This program is call a “Guaranteed Installment Agreement” because if you meet the criteria, you are guaranteed to be approved. More importantly, you do not have to provide any financial information.
2. Streamlined Installment Agreement
Under the Fresh Start Program, a streamlined installment agreement can be used for tax debts up to $50,000. You have up to 72 months to repay the debt, and no financial statement is needed. All prior tax returns must be current.
Unfortunately, the IRS will also file a federal tax lien to their interests.
3. Installment Agreement for Tax Debt over $50,000
If you owe over $50,000, the process for applying for a payment plan is much more stringent and requires you to provide financial information to determine the amount you can afford to pay.
We would encourage that you get the help of a Certified Tax Resolution Specialist. A Certified Tax Resolution Specialist will make sure you properly complete the Collection Information Statement (Form 433-F or Form 433-A) and get into a payment plan you can afford.
Unfortunately, the IRS will also file a federal tax lien to protect their interests.
4. Partial Payment Installment Agreement
A Partial Pay Installment Agreement is a plan where the minimum payment you can afford will not pay the debt over the remaining Statute of Limitations. This means if you remain on this plan over the entire remainder of the collection Statute of Limitation, your obligation to repay the debt will terminate and you will have only partially paid the debt. The IRS will review the equity in assets and may ask that you sell some assets to reduce the debt before qualifying for this program.
IRS will reevaluate your financial position every two years to determine if your financial circumstances have changed.
Unfortunately, the IRS will file a federal tax lien to protect their interests.
This is another situation where a Certified Tax Resolution Specialist will be a valued ally in completing the required form, providing the supporting documentation, and establishing the lowest payment possible.
5. Offer in Compromise (Settlement Agreement)
While not impossible to obtain an offer in compromise, it is exceedingly difficult. There are two key criteria to qualify for an Offer in Compromise;
- All tax returns must have been filed
- The minimum payment you can afford will not pay the debt over the remaining Collection Statute of Limitations.
Definitely get the help of a Certified Tax Resolution Specialist. This is a long and arduous process, and a specialist will likely be able to vastly improve the settlement amount over trying to do it yourself.
About Those Fees, Penalties & Interest
Note: When you are on an installment plan, penalties and interest continue to accrue on on the debt. When you establish a payment plan, failure to pay penalty is cut in half, over not being on an installment plan.
There is a break if you have lower income. Depending on the payment plan, you may have to pay a one-time set-up fee. If you set up an auto payments from your checking account this fee may not apply. If you decide to set it up by phone, mail, or at a service center, it will cost you a bit more.
Application for IRS Installment Agreement
Most of the these installment agreements allows you to apply online. In fact, if you apply online, you might get your set-up fee lowered or waived.
Once you have an installment agreement in established, you must make the minimum monthly payment by the due date each month. You must also file all tax returns on time and pay all future taxes in full and on time. Failure to comply on either of these may cause you to default on the agreement.
Note: Any future refunds will be applied to your tax debt until it's paid in full!
Short-Term IRS Payment Extension Options
The IRS offers a 120-day payment extension with no set-up fee. You can apply online for the Short-Term Extension, most people are accepted and without any financial information. The IRS may grant up to six-month extensions in hardship cases. To apply for a short-term payment extension due to financial hardship, you would apply using IRS form 1127 to request this extension.
Help With IRS Payment Plans or Extensions
Our Firm of Certified Tax Resolution Specialist include tax attorneys, CPAs, and enrolled agents that will work with to obtain a payment plan that fits with your budget. That can include payment plans on the full balance, Partial Payment Installment Agreements (PPIA), Offers in Compromise (OIC), extension requests, or even establishing a Currently Uncollectible Status.
Also See
Frequently Asked Questions Regarding an IRS Installment Agreements
Appealing an IRS Installment Agreement
What Is Your Tax Resolution Guarantee?
How Can I Get Tax Lien Released?
How Does Legacy Tax & Resolution Services Go About Helping Me?
How Much Do Your Charge For Your Services?
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