25 June 2020

IRS Installment Agreements – which one is right for you?

The most common way IRS tax debts are resolved is with an Installment Agreement. The IRS offers several different agreements. Which one is right for you?

Here are some basics. [The rules are different for individuals vs. businesses. This discussion will be about Individual Payment Plans.] Installment agreements require a fee, from $31 to $149. To qualify for any of the Installment Agreements, you must be current and compliant. You must also stay compliant during the Installment Agreement. If you fall out of compliance, your agreement will go into default.

(Current and Complaint means that your tax returns are filed and your current taxes are paid.)

The type of installment agreement you will choose depends on three things:

How much you owe
How much you can pay
How well you have been behaving

Here are the types of Installment Agreements:

Automatic
1. Owe less than $10,000
2. Can pay the full amount within 3 years
3. During past 5 years have not owed any tax or had an installment agreement
Streamline
1. Owe less than $50,000
2. Can pay full amount within 6 years
3. During past 5 years have not had a back-tax debt or had an installment agreement
Regular
1. Owe more than $50,000 or need a payment term longer than 6 years
2. Can pay full amount before the 10-year collections statute of limitations expires
3. This agreement requires full financial disclosure to the IRS
Partial-Pay
1. Any amount owed
2. Are not able to make large enough payments to full pay the amount before the 10-year statute of limitations expires
3. This agreement requires full financial disclosure to the IRS
4. The IRS will revisit your financial situation, usually within 2 years, to determine if a larger payment can be made