Installment Agreements (2024)

Payment plans (also referred to as Installment Agreements) are one of your options if you can’t pay your taxes in full when they’re due. Payment plans allow you to pay your debt over a time. You must be current with monthly payments, timely file your tax returns, and make estimated tax payments to qualify for a payment plan. If your payment plan is accepted, you must also remain current on filing and payment obligations while you are on the payment plan. Future refunds will be applied to unpaid taxes until the tax balance is paid in full.

There are two types of payment plans:

• Short-term payment plan: The IRS offers additional time (up to 180 days) to pay your balance in full. It’s not a formal payment plan, so there’s no application and no fee, but interest and any applicable penalties continue to accrue until the tax debt is paid in full. You can request a short-term payment plan by phone, mail, in-person, or online.
• Long-term payment plan (Installment Agreement): The IRS offers formal payment plans, also known as installment agreements, when repayment will take more than 180 days. More information about various long-term agreements is listed below under the “what are my next steps” section.

This notice or letter may include additional topics that have not yet been covered here. Please check back frequently for updates.

You have a balance on your tax account and you want to pay the balance within 180 days or via monthly payments to the IRS.

After requesting a payment plan, you may receive notices or letters for the following:

• Rejection of proposed payment plan/installment agreement.
• Confirmation of an accepted payment plan/installment agreement.
• Monthly reminders for payment.

If you are approved for a payment plan and then incur additional balances, fail to make required payments, or fail to file current tax returns, you may receive notices or letter for the following:

• Default of current payment plan/installment agreement.
• Termination of current payment plan/installment agreement.

It is important that you carefully read the letter or notice you received so you can respond accordingly or call the phone number on the notice or letter immediately if you have questions.

Guaranteed Installment Agreements

You have the right to an agreement without submitting a financial statement if:

• The amount of tax you owe (not counting interest and penalties) is less than $10,000.
• You (and your spouse, if you filed a joint tax return) have filed and paid all taxes due for thelastfive years.
• Neither you (nor your spouse, if you filed jointly) have had an installment agreement with the IRS in the previousfive years.
• You can pay the full amount you owe within threeyears.
• You agree to pay the liability before the period for collecting the tax expires.
• You comply with the tax laws during the agreement.

You can apply for a guaranteed installment agreement online, by phone, or by mail.

Streamlined Installment Agreements

There are two types of streamlined installment agreements, depending on how much and what type of tax you owe. For both types, you must pay the debt in full within 72 months (six years), and within the time limit for the IRS to collect the tax, but you won’t need to submit a financial statement.

• Assessed tax liability under $25,000 (include all assessed tax, penalties, and interest in computing the balance owed). This is available to individuals, businesses that are still operating and only owe Form 1120 income tax or Form 1065 late filing penalties, and businesses that have gone out of business that owe any type of tax.
• Tax liability from $25,001 to $50,000 (include all assessed tax, penalties, and interest in computing the balance due). This is available to individuals and out-of-business sole proprietors. This agreement requires payments to be made by direct debit or payroll deduction.

You can apply for a streamlined agreement online, by phone, or by mail.

Partial Pay Agreements

In this situation, you must have some ability to pay your taxes but can’t pay in full within the remaining time the IRS has to collect. The IRS may allow you to make payments until this collection period expires for less than the full amount owed. See Partial Payment Installment Agreement for more information.

Routine/Regular Installment Agreements

If you don’t meet criteria for guaranteed or streamlined IAs, you can still request an installment agreement from the IRS.You can request a routine installment agreement by calling the IRS or by mail, but not online.You will need to agree to pay the liability in full before the period for collecting the tax expires. Installment Agreements allow for additional provisions, when warranted:

• The Six Year Rule: Generally, if you only owe individual income tax, you may qualify for theSix Year Rule. You’d need to provide financial information but not proof of reasonable expenses. You must stay current with all filing and payment requirements, including projected penalties and interest on the tax debt, and fully pay the balance due in six years (72 months) and within the collection statute — the time the IRS has to collect the amount you owe.
• The One Year Rule: If you can’t pay your debt in full within six years, you may be given up to one year to modify or eliminate excessive necessary expenses. By modifying or eliminating these expenses, you may be able to pay the liability, plus accrued interest and penalties, within the six-year limit.

In-Business Trust Fund Express Agreement

An in-business trust fund express agreement may be available for businesses that owe up to $25,000. You must pay the debt in full in 24 months or before the statutory period to collect expires, whichever is earlier. You can also pay down the liability to $25,000 or less, and then apply.

You can apply for an in-business trust fund express agreement online, by phone, or by mail.

If none of these options seems to fit your circ*mstances, you can call the IRS and discuss your situation. Call 800-829-1040(individual) or800-829-4933(business), or the phone number on your bill or notice.