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5 IRS Installment Agreements to Make Paying Tax Debt Less Painful

An IRS installment agreement spreads your debt over a set number of months while protecting you from serious collection tactics.

Are the back tax notifications piling up in your mailbox? Or did you end up with an unexpectedly heavy tax bill after filing this year? When faced with loads of tax debt, it can feel like you’ll be enslaved to the government until the day you die. Thankfully, the IRS offers a way to pay them back over time. An IRS installment agreement spreads your debt over a set number of months while protecting you from serious collection tactics like liens, garnishments, and property seizures.

Here are five types of IRS installment agreements to make dealing with back taxes a little less terrible:

1. Guaranteed Installment Agreement

  • Qualification level: Easy.
  • Tax debt amount: $10,000 or less.
  • You must meet the following criteria:
    • Your past tax returns have been filed.
    • The previous five years’ returns have not been filed late or paid late.
    • You haven’t used an Installment Agreement plan in the previous five years.
    • The entire tax debt amount will be paid in three years or less.
  • You don’t need to provide a full financial statement to the IRS.
  • Why apply: It’s called “guaranteed” because the IRS will most likely let you into this agreement if you meet the following criteria, and it’s simple to apply for yourself.

2. Streamlined Installment Agreement

  • Qualification level: Easy.
  • Tax debt amount: up to $50,000.
  • Thanks to the IRS Fresh Start Initiative, this is similar to the Guaranteed Installment Agreement but for those with a greater debt (up to $50,000). The payments can span for up to 72 months.
  • You don’t need to provide a full financial statement to the IRS.
  • Why we love it: Streamlined has the simplicity of Guaranteed but with a higher debt cap and longer time to pay off (and no federal liens).

3. Installment Agreement for Tax Debt of Over $50,000

  • Qualification level: Difficult.
  • Tax debt amount: Over $50,000.
  • The IRS will conduct a thorough review of your financial situation to ensure the earliest payment of tax debt. You must provide a detailed financial statement.
  • Why apply: You can pay your large debt amount over an extended period of time.
  • TIP: Enlist the help of a tax professional to make sure you provide the IRS with all necessary financial information on a Collection Information Statement (Form 433-F or Form 433-A)

4. Partial Payment Installment Agreement

  • Qualification level: Difficult.
  • Tax debt amount: Varies; unaffordable to you.
  • Why apply: If you can’t afford the minimum payment for guaranteed or streamlined installment agreements, a partial payment allows for a longer repayment term. The IRS will reevaluate your financial position (including equity in assets) every two years to see if your fortunes have changed.
  • The IRS will file a federal tax lien to protect its interests in collecting the debt. You may be required to sell property and assets to pay off your tax debt.
  • TIP: Enlist the help of a tax professional to make sure you provide the IRS with all necessary financial information.

5. Settlement Agreement (Offer in Compromise)

  • Qualification level: Extremely difficult.
  • Tax debt amount: Varies; unaffordable to you.
  • Why apply: This agreement allows you to pay less than what you owe to the IRS. It is best if you’re in a destitute situation.
  • TIP: Enlist the help of a tax professional to see if you qualify for Offer in Compromise and to help you start the vigorous application process.

Let’s Make a Deal (with the IRS)

No one said paying back taxes would be easy. Dealing with the IRS isn’t any better.

Taxpayer history is the primary factor in determining what kind of IRS installment agreements you qualify for. If you’ve made a payment plan in the past with the IRS that didn’t work out too well, the IRS may be less likely to give you another chance. Additionally, the installment agreements above are all for personal tax debt. Agreements for business tax debt are a whole new ballgame in comparison.

No matter what your situation is, the best way to find a positive outcome when seeking an IRS installment agreement is to contact a tax professional. Tax experts like ours exist to help taxpayers like you who fall into common, yet unfortunate tax situations get out of the pit. Our tax professionals have consulted on over $16 billion in tax debt since 2007 and help hundreds of taxpayers score IRS installment agreements every day. For a free consultation on IRS agreements, give us a call today.

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