IRS Agreement

What Is an IRS Installment Agreement

When you find yourself in a tax situation with the IRS the first notice you will receive is a request of payment for the entire tax liability in full. This request usually comes with a short amount of time allowedfor you to make that payment. If you are like most taxpayers andare unable to pay your taxes, you may qualify for relief through an Installment Agreement with the IRS. Setting up a monthly payment plan with the IRS is one of the easiest ways to comply with the IRS and pay your past due federal tax. When you are placed on an Installment Agreement, all extra collection actions – such as bank levies, wage garnishments or property seizure- will cease.
IRS Installment Agreement

However, the IRS will continue to charge penalties and interest on your account until it is paid in full. There are many payment options for an Installment Agreementwith the IRS and it mainly depends on the balance you owe. A payment plan can either be put in place for a long-term (120 days or more) or a short-term (120 days or less) period.

IRS Installment Agreement

What Is A Guaranteed Installment Agreement?

First, it is necessary to see how much money you owe in unpaid taxes. You can obtain this info from your tax return or you can call the IRS. Based on the balance that is due, it will help determine which type of an Installment Agreement you will qualify for. If you owe less than $10,000 to the IRS, then you can enter into a guaranteed installment agreement. This means that it is guaranteed you will receive a payment plan. You will not have to submit any financial info to do so. You must not have been entered into a similar agreement within the past five years. When making this request you must agree to file and pay all your tax returns in the future timely. Mainly, the monthly payment amount that the IRS will accept is determined by taking the total amount you owe, with penalties and interest factored in, and then dividing that total amount by 36 months.

This will allow for the full amount of the liability to be paid over three years. If you chose to pay it off sooner, then you are more than welcome to. The IRS will never deny you from making extra voluntary payments outside of your agreement. Payments can be mailed into the Service by check or money order or made online with a credit card at any time. The major advantage of this type of payment plan is that the IRS will not file a Federal Tax Lien against you. They are unable to issue a levy on your wages or assets either.

What Is A Streamlined Installment Agreement?

If you owe $100,000 or less in federal taxes on an individual taxpayer’s account or $25,000 or less in federal taxes for a business taxpayer’s accounts, you may qualify for a Streamlined Installment Agreement. This type of payment option allows you to move forward with setting up a monthly payment without providing any financial info either. Minimal disclosure with such a large balance due will give you the ease of paying back the IRS without exposing your income or assets. You must agree to the minimum monthly payments that are required. The agreement must also be set up on a direct debit, which means a Form 433-D must be sent with your request. The minimum required payment is calculated through the IRS’ computer system.
IRS Installment Agreement

The payment can vary based on numerous factors of your account.The advantage of A streamlined Installment Agreement is that it can be paid over many terms. The terms can range from 60 to 84 months. These terms will never go over your Collection Statute Expiration Dates, or CSED’s. A CSED is the expiration date placed on each year that a balance is due. Once this date is reached, the IRS can no longer legally try to collect from you.

What Is a PPIA?

If you cannot afford the minimum monthly payments of a Streamlined Installment Agreement, then you may want to consider a partial payment installment Agreement. A partial payment installment agreement (PPIA) will establish payments to the IRS based on your financial status. The payments are derived from the leftover amount on a monthly basis that you can afford after all income is reported and all expenses are accounted for. This is called your net discretionary income. You will also be required to provide the IRS with full financial info. This will require a Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals to be sent with your request.

What Is Form 433-A?

A Form 433-A lists all yourassets, income and expenses. Assets would include boats, homes, cars, bank accounts, etc. If it shows that there is equity in your assets, then the IRS may ask for you to sell the asset or attempt to borrow against it. The idea behind this request is to use the equity you have to pay your tax bill with the IRS. The IRS will try and secure any funds they can before agreeing to a partial pay Installment Agreement. Keep in mind that under this type of agreement, the IRS will look at your financial info every two years. If the IRS sees that your income or ability to pay has increased, they will review your account and expect that you increase your monthly payments as well.
IRS Installment Agreement
IRS Installment Agreement


Income taxpayers who have a total balance of less than $25,000 and set their monthly payments up on a direct debit installment agreement, or DDIA, can request to have liens that were already filed, withdrawn. This request can be made after three consecutive monthly payments have come out of the bank. If you are trying to avoid the Federal Liens from being filed entirely, there are other options. The IRS has expanded their criteria and will now only place a lien on a tax liability balance that is $50,000 or more. If you have a balance that is $25,000 to $50,000 and do not place the payment plan on a direct debit or payroll deduction payment method, liens will be filed. They can be avoided by sending in a Form 433-D, Direct debit or Form 2159, Payroll deduction agreement. Each case is determined individually.
Form 9465

What Is OPA?

To request an Installment Agreement with the IRS you must make sure that your account is up to date with the filing of all tax returns. If there are any tax returns missing, they must be filed immediately. Your request for an Installment Agreement can be done using the IRS Online Payment Agreement (OPA), mailing in Form 9465, Installment Agreement Request, or by calling the IRS. Applying for a short-term payment plan Installment Agreement online can save a lot of hold time,which can be expected, when you call in. If your balance is above the $100,000 threshold and financials are needed, then you cannot apply online for a payment plan. All requests for that amount of a tax balance must be made by mailing in the required forms or by calling the IRS.
IRS Installment Agreement

Can You Choose A Payment Due Date?

It would be best to consult with a tax expert before sending in your financial info. Before submitting the request, you must choose a payment due date that is between the 1st and the 28th. This will become the date your payment is due every month. If a late or missed payment should occur, you will be at risk for defaulting the Installment Agreement. Once the plan defaults, you will be open for collection enforcement action to take place. These actions can cause Notice of Federal Tax Lien being filed or an IRS Levy on your bank account or wages to collect the entire amount that is due.

What Steps Do You Take To Make Payments?

Generally, the IRS will provide a ruling, based on your request, within 30 days. While your request is under review, you should try to make voluntary tax payments. The payments should be equivalent to the amount you are requesting monthly. When the IRS manager gets a hold of your request and notices the voluntary payments coming in, it can help your request look affordable. This will also show that you are making steps towards becoming compliant. Once your request is accepted, the IRS will issue a notice to you stating the terms and conditions of your agreement. The notice will include information regarding the one-time user fee that will be charged. This fee is based on the method that the request was established. If you mailed in a Form 9465 or made the request by phone, a regular Installment Agreement fee is $225.
IRS Installment Agreement

A Regular direct debit installment agreement has a fee of $107. If the IRS determines that you are a low-income taxpayer, this fee can be reduced to $43. To qualify as a low-income taxpayer your income must be at 250% of the Federal Poverty Line. Your reduced fee will be granted regardless of the method used with your request. If you chose to use the online payment agreement to set up the installment agreement the onetime fee is $149. For a Direct debit online payment agreement, the user fee would be $31. If there is a time that your agreement needs to be restructured or reinstated, you will be charged an additional one-time fee of $89.