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IRS Installment Agreements

Date: 12/9/2019

accountant with client

If you have unsettled tax debt, we have options for you to consider.  As you try to settle your tax debt, an IRS installment agreement may allow you to pay off your tax balances gradually over time.  Depending on the individual, IRS installment agreements vary based upon the amount of tax, penalty, and interest owing.  Our ultimate goal is to assist you in finding a long-term solution that efficiently pays off your debt over time.

According to the IRS, an installment agreement payment plan is an agreement with the IRS to pay the taxes you owe within an extended timeframe.  You should request a payment plan if you believe you will be able to pay your taxes in full within the extended time frame.  If you qualify for a short-term payment plan you will not be liable for a user fee.  Not paying your taxes when they are due may cause the filing of a Notice of Federal Tax Lien and/or an IRS levy action.  See Publication 594, The IRS Collection Process (PDF).

Below is a variety of installment agreements that may suit your needs:

Guaranteed Installment Agreements

These types of agreements with the IRS are usually the easiest to acquire.  Precisely, the IRS is then required to accept proposals of installment agreements meeting certain criteria.  If the taxpayer meets all of the criteria, then the IRS is required to adhere to the original proposal for those taxpayers who:

  • Owe income tax only of $10,000 or less (excluding penalties and interest);
  • Have not failed to file any income tax returns or to pay any tax shown on such returns during any of the preceding five taxable years;
  • Cannot pay the tax immediately;
  • Agree to fully pay the tax liability within 36 months;
  • Agree to file and pay all tax returns during the term of the agreement; and
  • Have not entered into an installment agreement during any of the preceding five taxable years.

As long as you follow these rules and agree to file and pay on time for the future, you can get approved for this IRS installment plan.

Streamlined Installment Agreements

Most taxpayers with a balance due of up to $25,000 meet the criteria for streamlined processing of their installment agreement request.  In general, IRS assistors can set up an installment agreement without the completion of a Collection Information Statement or a determination to file a Notice of Federal Tax Lien.

The new streamlined and expanded installment agreement applies to requests through:

  • SB/SE Campus Collection Operations, including:
    • Automated Collection System (ACS)
    • Automated Collection System Support (ACSS)
    • Compliance Services Collection Operations (CSCO)
      Compliance Services Collection Operations (CSCO)
  • Taxpayer Assistance Centers

The criteria do not apply to accounts worked by Field Collection revenue officers.

The new streamlined processing criteria apply to the following types of taxpayers:

  • Individuals and out-of-business sole proprietors with an assessed balance of tax, penalties and interest up to $50,000
  • Out-of-business taxpayers with assessed balances up to $25,000
  • In-business taxpayers with income tax only assessed balances up to $25,000

Note: All taxpayers must be current with filing all required returns to qualify.

Partial Payment Installment Agreements

If you do not qualify for any of the above installment agreement plans, you may want to apply for a Partial Payment Installment Agreement.  Under this IRS installment plan, you are able to adjust your monthly payment based on what you can afford minus living expenses.  To sum up, the IRS will accept partial pay installment plans, and combined with the limitation on how long the IRS has to collect a debt, this results in an agreement where you repay the IRS less than what you owe.  In other words, partial pay installment agreements present a viable settlement alternative to the IRS offer in compromise program.

In the event that a taxpayer is left destitute and without basic necessities like food and shelter, a plan like this is designed to make the payment process easier.  Unfortunately, the IRS may enforce a tax lien in this circumstance in order to secure your payment, and as a result you may have difficulty obtaining credit.  If you are interested in this installment agreement, you must fill out a financial statement form as issued by the IRS.  The government agency will analyze the statement form and designate what you will pay based on your finances.

IRS Installment Agreements & IRS Tax Resolutions Michigan

If you don’t see an installment agreement above that you feel suits you, give us a call.  Our tax experts at Heemer-Klein can help you with choosing the best plan for you.  Our firm is on the watch to protect your personal assets from unnecessary risks.  Our tax planning services are geared to ensure you will ethically pay the lowest possible tax.  Once your set-up is complete, we will be honored to service all of your business accounting and tax preparation needs.

Click here to fill out our contact form, or call us at our Warren office at (586) 209-3739 about our small business start-up services.  We have offices in Warren, Sterling Heights and Richmond, Michigan.

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