Can I Make Installment Payments on My Tax Debt?

IRS Installment plan

If you owe the IRS money and cannot pay the entire amount at once, you might consider applying for an installment payment plan. While these agreements provide you with relief from having to immediately pay the IRS, they still require you to pay the agreed-upon amount over a specific period of time and are subject to interest and penalties until the balance is paid in full.

Types of Installment Plans and Agreements

The IRS offers a few different types of installment payment plans. To determine the best option for you, consider how quickly you can pay the debt and the amount you can afford to pay each month, keeping in mind constantly accruing penalties and interest.

These are the different types of installment payment plans: 

  • Short-term payment plan – if you cannot pay now but only need a little more time, this might be the way to go. These plans give you up to 180 days to pay your balance if you apply by phone or mail or in person. You may apply for a short-term agreement online through the IRS’s website, but only if you owe less than $100,000 in taxes, penalties, and interest, and pay the balance within 120 days. There is no setup fee for this installment arrangement.
  • Guaranteed installment agreement – if you need more than 180 days to pay your tax bill and the total due is $10,000 or less, you can qualify for a guaranteed installment agreement. You must have filed and paid your taxes on a timely basis in the past five years and be able to pay off the debt in three years.
  • Long-term installment agreement – these agreements allow more payment time up to, and possibly over, 6 years, and are usually used for larger balances. Like the short-term agreement, you may apply online (only if your total balance is $50,000 or less), in the mail or by phone. The IRS charges a setup fee that varies based on the way you pay and the way you apply. For example, if you make your monthly payments through direct debit from your checking account and apply online, your fee is $31. If you instead pay by check and apply over the phone or by mail, your fee is $225. Most taxpayers applying for a long-term installment agreement on a balance of $50,000 or less can qualify for a streamlined agreement, which requires less financial disclosure and often avoids the IRS filing a tax lien.
  • Partial-pay installment agreement – if your debt is overwhelming and you cannot pay off the total even with installments, you might be eligible to apply for a partial-pay installment agreement. The application process is different and requires you to fill out both Form 9465 Installment Agreement Request and Form 433-A Collection Information Statement as well as present information on your finances and equity. The IRS will perform an investigation that can last up to a year and then enter into negotiations over the total due. A tax professional can help you ensure that you file all of the relevant relief forms correctly.

Who Is Eligible for an Installment Agreement?

To be eligible for any of the installment agreement plans, you must be current on all tax filings and other payments, including your quarterly estimated taxes. If you are in bankruptcy, you are not eligible to apply for an installment agreement.

What Do I Need to Apply?

When applying for an installment plan or agreement, you will need to provide the IRS with basic taxpayer information:

  • Name
  • Address and email address
  • Date of birth
  • Filing status
  • Social Security number
  • Balance due

When applying online, you will need to confirm your identity with a financial account number, mobile phone number, or an activation code obtained through the IRS and mailed to you.

Have Questions? Call the Experienced Tax Attorneys at Wiggam Law  

If you owe the IRS a large amount and cannot pay it off right away, the experienced tax attorneys at Wiggam Law can help you evaluate payment options, including long-term and partial-pay installment agreements. We can also help you apply for a payment plan on your state taxes in Georgia or any other state. Contact metro Atlanta’s top tax attorneys online or give us a call at (404) 233-9800.

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