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IRS Installment Agreements: Every Option Explained

The IRS offers five different payment plan options. Most taxpayers qualify for at least one of them.

Five Ways to Pay the IRS Over Time

If you owe the IRS and cannot pay in full, a payment plan is almost always available. The IRS would rather collect something every month than chase you with levies and garnishments. Here are your five options.

Guaranteed Installment Agreement

If you owe $10,000 or less in combined tax, penalties, and interest, and you can pay it off within three years, the IRS must give you a payment plan. They cannot refuse. This is the simplest and fastest option. You can set it up online without even calling the IRS.

Streamlined Installment Agreement

If you owe $50,000 or less and can pay it off within 72 months, you qualify for a streamlined agreement. No detailed financial disclosure required. The IRS does not ask to see your bank statements or living expenses. You just pick a monthly payment amount that pays the balance before the collection statute expires.

Non-Streamlined Installment Agreement

If you owe more than $50,000, you need to file a Collection Information Statement on Form 433-A for individuals or Form 433-B for businesses. The IRS reviews your income, expenses, and assets to determine what you can afford to pay monthly. This is where negotiation skill matters. The difference between an experienced tax attorney and doing it yourself can be hundreds of dollars per month.

Partial Pay Installment Agreement

This is the option most people do not know about. If the IRS determines that you cannot full-pay the balance before the collection statute expires, they can accept a monthly payment that will not pay the debt in full. The remaining balance is forgiven when the statute expires. This is like a slow-motion offer in compromise.

Currently Not Collectible Status

Technically this is not an installment agreement. It is a determination that you cannot afford to pay anything. The IRS stops all collection activity and the collection statute continues to run. When the statute expires, the debt disappears. I use this strategy for clients who are retired, disabled, or have income that barely covers their living expenses.

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