Installment Agreements: A Manageable Way to Resolve Tax Debt

When faced with tax debt that cannot be paid in a lump sum, you may qualify for an installment agreement with the IRS. Here’s how it works:

Qualifying for an Installment Agreement – Individuals

Short-term payment plans

For taxpayers who have a total balance less than $100,000 in combined tax, penalties, and interest. This plan provides an additional 180 days to pay the balance in full.

Long-term payment plan (also called an installment agreement)

For taxpayers who have a total balance less than $50,000 in combined tax, penalties, and interest. They can make monthly payments for up to 72 months. Taxpayers are encouraged to set up a plan payment using direct debit (automatic bank withdrawal), which eliminates the need to send a payment each month, saves postage costs, and reduces the chance of default. The IRS requires direct debit for balances between $25,000 and $50,000.

Qualifying for an Installment Agreement – Business Taxpayers

Long-term payment plan (also called an installment agreement)

For business taxpayers who have a total balance less than $25,000 in combined tax, penalties, and interest from the current and preceding tax year. They can make monthly payments for up to 24 months. Taxpayers can choose to set up payments using direct debit (automatic bank withdrawal) and require it on balances between $10,000 and $25,000.

Applying for an Installment Agreement

You can apply online or by phone. Individual taxpayers will need to provide:

• Full legal name and spouse’s name (if married)
• Social Security Number or Individual Taxpayer Identification Number (ITIN)
• A valid email address
• Mailing address from your most recent tax return
• Most recent filing status

For businesses, the required information includes:

• Employer Identification Number (EIN)
• Date of EIN assignment
• Mailing address from your most recent tax return
• Caller ID number from your IRS tax delinquency notice

IRS Payment Plan Challenges

The IRS may propose higher monthly payments than expected, or try to avoid an installment agreement altogether. Negotiation is critical, and our experienced Tax Resolution Experts can guide you through this process.

Representation by Fiore Tax Resolution Experts

Fiore Tax Resolution Experts understand the system inside and out. We’ll help you propose realistic payment terms and negotiate directly with the IRS on your behalf.

Contact Us for Assistance

Don’t face the IRS alone. Contact our office today for a free, confidential consultation to explore installment agreements and other solutions for resolving your tax debt.