IRS Payment Plans and Installment Agreements
IRS Payment Plans and Installment Agreement
IRS payment plans or installment agreements are agreements between the taxpayer and the IRS wherein the taxpayer agrees to make regular monthly payments to the IRS until the balance is paid in full.
A common question for taxpayers who owe large amounts of money is whether they can make installment agreements. You may be able to get a tax debt under installment agreement if your tax debt has been ongoing for a few years and the IRS has not entered into an installment agreement with you yet.
The default length of any installment agreement is 72 months, or six years. If your tax debt has been ongoing for a few years, then the length of the agreement corresponds to the remainder of time left before your debt expires or reaches its Collection Statute Expiration Date (CSED).
Payment and installment plans
If you owe less than $25,000 in federal taxes, you can apply for a Streamlined Installment Plan with IRS Form 9465. Payments are calculated using a 72-month payment plan or by dividing the remaining time until your debt’s statute of limitation expires into months.
Streamlined installment plans with a total tax debt of $25,000 or less are entitled to a simplified application process, which can be completely entirely online as well.
There are very few forms to fill out in comparison to other tax debt payment plans, and you do not need to submit to a thorough financial checkup. However, the IRS may still place a federal tax lien on your account until your debt is completely paid, or until you have made at least a few back-to-back payments with no history of defaulting.
IRS Loans and Debt
The IRS calculates the amount of your monthly payment based on your income and the allowable monthly expenses. They also take into account how much time is left in your statute of limitations.
A tax debt expires after ten years plus tolling from its tax assessment date – the date on which the IRS determines the debt, not the date on which you received your notice of tax debt.
As such, most installment agreements generally fit into a tax debt’s total lifespan. If your tax debt is significantly older, you may be entitled to different payment options. It’s important to work with a professional to determine which type of plan is best for you, and how to proceed.
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