If you are not able to pay your tax debt in full, installment agreements may be an option. These agreements are payment plans that allow you to pay the taxes you owe in a period of time set by the IRS in order to make your debt more manageable.
Continue reading to learn more about IRS installment agreements and which payment plan is the best for you.
Types of Installment Agreements
In general, the IRS offers four different types of installment agreements. Your particular tax situation will determine the payment plans that are available to you:
- Guaranteed Installment Agreement: 36-month payment terms for balances under $10,000 (not including interest and penalties).
- Streamlined Installment Agreements: 72-month payment terms for balances under $ 50,000.
- Partial Payment Installment Agreement: for taxpayers who cannot fully pay their tax debt before the 10-year collections statute expires.
- Non-Streamlined Installment Agreement: for balances over $100,000 or for taxpayers who owe less than $100,000 and have no ability to make the monthly streamlined payments but have some ability to pay.
How to apply for an Installment Agreement?
The easiest way to request an installment agreement is through the IRS Online Payment Agreement Program. If you qualify, you can apply for a payment plan online to pay off your balance overtime.
Once you complete your online application, the IRS will notify you immediately if your payment plan has been approved.
If you can’t or you decide not to use the online system, you can request an installment agreement by filing the IRS Form 9465. In addition to the form, the IRS will ask you to send the required documentation to the address listed in the instructions.
Also, the IRS will need you to complete another form:
- For individuals: Form 433-F (Collection Information Statement).
- For business: Form 433-B (Collection Information Statement for Businesses).
If the IRS approves your request for an installment agreement, make sure you pay on time every month. If you are unable to make a payment, contact the IRS immediately.
Can I have two Installment Agreements with the IRS?
If you already have an installment agreement with the IRS and also expect to owe taxes for the current year, you should act immediately and request a modification of the payment plan you already have.
This does not constitute a second agreement. Interest and penalties will be charged on the total balance due until the debt is fully resolved.
What if the IRS rejects my request for a payment plan?
The IRS may deny your request for an installment agreement if it considers that you do not meet the necessary requirements. If this happens, you have the right to appeal. To do this, you must request an appeal within 30 days by completing Form 9423 (Collection Appeals Request).
It is important to know that the IRS is prohibited from taking enforcement actions while the installment agreement is pending and for 30 days after rejection or termination. This gives you enough time to request an appeal.
Should I seek help to apply for an IRS payment plan?
Applying for a payment plan can be an overwhelming procedure, especially for those taxpayers who have no experience with IRS tax relief programs.
For that reason, we recommend consulting with a tax professional before making any decisions. Consulting with an expert can help you determine the ideal payment plan for your particular situation and get IRS approval quickly and efficiently.