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Installment Agreements: Paying Over Time

June 11, 2015

If you do not have the ability to pay your entire tax debt at once, then you may want to request an Installment Agreement. You may qualify to pay back you liability for as many as 72 months, depending upon the type of agreement.

Guaranteed Installment Agreement

If you owe $10,000 or less in back taxes and you can pay it within 36 months, then you may qualify for a Guaranteed Installment Agreement; you simply need to meet these additional conditions:

  • You have filed all previous tax returns.
  • You haven’t filed or paid your taxes late in the last five years.
  • You did not use an Installment Agreement in the last five years.

After qualifying for an agreement, you will need to pay your minimum monthly payment each month until the entire tax debt, with penalties and interest, is paid off.

Streamlined Installment Agreement

If you owe $50,000 or less in back taxes and you can pay it off in 72 months, then you may be eligible for a Streamlined Installment Agreement. The IRS’ Fresh Start initiative has made it easier for taxpayers to qualify for Installment Agreements by simplifying the qualifications. Now, you are not required to provide extensive financial details by filing Form 433-F.

You will need to make sure you have filed all your previous tax returns, and make an agreement to make your monthly payments as scheduled.

If your balance is more than $50,000, or you need more than 72 months to pay off your tax debt, then you may want to consult with a licensed tax professional prior to requesting an IRS agreement.

Partial Payment Installment Agreement

If you cannot pay your tax debt due to a financial hardship, then you may qualify to pay only a partial amount of your balance through a Partial Payment Installment Agreement and pay it in installments. Usually, your monthly installment is reduced to an amount that you can pay without affecting your allowable living expenses.

It is essential to use a tax professional when requesting this type of agreement. It’s also important to make each agreed-upon payment on time, otherwise the agreement can be terminated by the IRS and collection actions will resume.

To qualify for a Partial Payment Installment Agreement, you need to provide a financial statement, Form 433-F, to the IRS to allow them to determine your financial situation. A licensed tax professional can put this together for you and offer advice on how to best resolve your issue quickly and completely.


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