4 Types of IRS Tax Installment Agreements That Taxpayers Can Use

IRS Tax Installment Agreement with The Law Offices of Nick Nemeth

The Internal Revenue Service (IRS) has in place various installment agreements to help taxpayers pay off their tax debts with ease. These staggered payment methods are an alternative sanctioned by the IRS in the interest of taxpayers who find that paying their entire tax debt all at the same time is not possible. The IRS wants the money it owes from taxpayers, and so these installment agreements are designed to make tax payments trouble-free for taxpayers. Let’s now learn about the four common types of installment agreements available with the agency.

1. Guaranteed Installment Agreement

Taxpayers who want to avail guaranteed installment agreement with the IRS must meet the following conditions:

  • They owe less than $50,000 excluding interest and penalties
  • They have filed tax returns, paid owed taxes, and have not entered into any installment agreement in the last five years
  • They are not in a position to pay their tax liabilities on due date or within 120 days
  • They pay the minimum monthly payment

The greatest advantage of this installment agreement is the IRS doesn’t file a federal tax lien against taxpayers for their outstanding dues.

2. Streamlined Installment Agreement

A part of the IRS ‘Fresh Start Program,’ the Streamlined Installment Agreement is another IRS tax installment agreement. A taxpayer qualifies for this agreement if:

  • Their tax liability including interest and penalties does not exceed $50,000
  • The proposed payment is equal to or greater than the minimum acceptable payment
  • They can pay off the balance within 6 years

Like in case of a guaranteed installment agreement, the IRS doesn’t file a federal tax lien in streamlined installment agreement.

3. Non-Streamlined Installment Agreement

If a taxpayer owes more than $50,000, they can consider the non-streamlined installment agreement. This agreement is primarily for taxpayers whose repayment term is longer than five years, or who don’t meet the criteria for a guaranteed or streamlined installment. This installment agreement requires negotiations with the IRS as it falls outside the agency’s standard guidelines for automatic approval. In case a taxpayer is unable to pay taxes through the non-streamlined agreement, they may file for an Offer in Compromise.

4. Partial Payment Installment Agreement

As the name suggests, partial payment agreement is where a taxpayer enters into an agreement with the IRS for only a partial payment of their tax liabilities. It is basically based on what the taxpayer can afford to pay monthly. To qualify for this payment arrangement, taxpayers must submit Form 433-F that reports their income and living expenses. Following the approval of this payment plan, the IRS will perform a financial review every 24 months, which may result in an increase in the amount of installment, or termination of the agreement.

Unable to Pay Taxes? We Can Help!

If you are wondering how to best pay off taxes owed, consider the installment plan tax payment options discussed above. They are meant to make debt payment more manageable and less stressful for taxpayers in the U.S. The tax lawyers at the Law Offices of Nick Nemeth provide guidance to a number of clients on these and other payment solutions as a part of our tax help service. If you too are facing issues with tax payment, or have any questions or concerns, call (972) 426-2553, or click here and fill out the contact form. We are always ready to assist you.