IRS Installment Agreement

An installment agreement,

or payment plan, is offered by IRS offers as a way to pay down your delinquent taxes. Full Payment Plans and Partial Payments Plans are offered by the IRS. These payment plans are monthly payment obligations made to the IRS in an effort to satisfy your back tax obligations and hold off further IRS collection activity.

A partial payment agreement

is a method of making a series of monthly payments over time in order to prevent the IRS form enforcing collection activity. The repayment terms are based on the current economic situation of the taxpayer. The theory is that the taxpayer may be able to resolve the tax, penalties and interest for less than what is owed by making these payments for the remainder of the statutory collection term. However, the IRS can alter or amend the terms once the economic conditions of the taxpayer improve. Therefore, what may start as a relatively low monthly payment can be increased as the economic situation of the taxpayer increases.

Tax settlement offer in compromise

A Full Payment Agreement

is where a taxpayer must pay the full amount of tax, penalties and interest due on back taxes within a specified period of time. With a Full Payment Agreement, there is typically no application fee. The two primary types of Full Payment Agreements are Guaranteed Installments and Streamlined Installments.

With a Guaranteed/Traditional Installment Agreement, the taxpayer owes over $10,000 in unpaid taxes, has filed all returns necessary, and submits a repayment plan that allows for the repayment in full of the tax due, penalties and interest, prior to the statutory collection period expiring, or within 36 months, whichever occurs first.

With an Expedited Installment Agreement, the taxpayer owes under $50,000 of back taxes, has filed all returns necessary, and submits a repayment plan that allows for the repayment in full of the tax due, penalties and interest, prior to the statutory collection period expiring, or within 72 months, whichever occurs first.

To request an installment agreement

through the IRS taxpayers may use either an Online Payment Agreement Application or through a traditional Installment Agreement Request. The monthly payments can be made via a variety of payments, as follows:

  • Direct Debit from the taxpayer’s bank account.
  • Payroll Deduction from the taxpayer’s employer.
  • EFTPS or payment by electronic federal tax payment system.
  • Credit Card payments over the telephone or Internet.
  • Check or Money Order payments made via mail.

To apply for an Installment Agreement a taxpayer may be required to pay a filing fee between $0-$120 depending on the type of installment agreement, the payment method, and the taxpayer’s financial circumstances.

A Tax Settlement Attorney-Lawyer Can Help

The difference between

a full payment installment agreement and a partial installment agreement can be enormous financially. So, making a proper determination could have a huge economic impact. When applying for certain types of installment agreements, the IRS may require certain financial information. The information can be used against you if the IRS moves forward with collection efforts after an installment is breached or terminated. This could make the collection efforts for the IRS easier to enforce. Finally, a taxpayer should always explore if he/she qualifies for an Offer in Compromise, as it is generally the quickest, easiest, and least expensive way to settle tax obligations if the taxpayer qualifies.