IRS payment plan help
IRS Installment Agreements: Set Up a Payment Plan You Can Afford
If you can’t pay the IRS in full, a payment plan lets you pay over time and generally keeps levies off the table while you keep up with it. We find the plan that fits and set it up for you.
- Simple plan
- $50,000 or less, and most people get up to 10 years
- Short-term
- Under $100,000, paid off within 180 days, no setup fee
- Setup fee
- $29 to $178 for a long-term plan, depending on how it’s set up
- Penalty on a plan
- Drops to 0.25% a month if you filed on time
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On this page
The short answer
What Is an IRS Installment Agreement?
In one paragraph
An IRS installment agreement is a payment plan that lets you pay a tax balance in monthly payments instead of all at once. Interest and some penalties keep adding up until it’s paid, but while the plan is in effect the IRS generally won’t levy your wages or bank accounts. Most people who owe $50,000 or less qualify for a simple plan.
Taxpayers can pay off their tax debt to the Internal Revenue Service (IRS) via an installment payment system. Despite this, immediate payment is the best option, considering that interest and penalties keep adding up until the balance is paid in full.
Your options
Types of IRS Payment Plans
An installment agreement comes in handy in cases where a one-off tax debt settlement is impossible. This alternative comes in four different forms:
- Non-streamlined payment
- Partial payment
- Streamlined payment
- Guaranteed payment
There’s also a short-term plan for balances you can pay off within 180 days. Here’s how each one works and who it fits.
Short-term plan
Fits whenYou can pay in full within 180 days.If you owe less than $100,000 in combined tax, penalties and interest and can pay it off within 180 days, a short-term plan is the simplest option. The IRS charges no setup fee for it, though interest and penalties keep adding up until you finish.
Streamlined payment
Fits whenYou owe $50,000 or less and have filed all your returns.The IRS now calls these simple payment plans. Individuals who owe $50,000 or less in assessed tax, penalties and interest, and who are current on their filing, qualify without a financial statement. The IRS says most taxpayers get up to 10 years to pay.
Non-streamlined payment
Fits whenYou owe more than $50,000, or the simple plan terms don’t fit.The IRS asks for a full financial statement and sets the payment from your income, expenses and assets. This takes more paperwork and more negotiation, which is where the way your finances are presented matters most.
Partial payment
Fits whenYou can pay something each month, but not the full balance before the collection period ends.A partial payment installment agreement pays less than the full balance. The IRS requires a full financial statement, expects equity in assets to be addressed first, and reviews these agreements every two years. If it fits, the rest of the balance can expire when the IRS’s time to collect runs out. Here’s more on whether the IRS forgives tax debt after 10 years.
For balances of $10,000 or less
Guaranteed Installment Agreement
Here are the conditions an applicant for a guaranteed installment agreement must meet:
- Owe $10,000 or less in tax, not counting penalties and interest;
- Over the past five years, have filed every required return, paid the tax shown on those returns, and not had another installment agreement;
- Must be unable to pay the tax in full when it’s due;
- Must be ready to pay off the tax liability in the space of three years; and
- Must agree to file and pay on time for as long as the agreement lasts.
When you meet these conditions, the IRS has to accept the agreement. Simple payment plans like this one don’t require a lien determination, according to the IRS.
What it costs
What an IRS Payment Plan Costs
A payment plan doesn’t reduce what you owe. You still pay the full balance, plus interest and some penalties until it’s paid, plus a setup fee for a long-term plan. Here’s what the IRS charges today.
Short-term plan setup
No setup fee for plans paid off within 180 days.
Long-term plan setup
$29 online with automatic bank withdrawals, $69 online without them, $107 or $178 by phone, mail or in person. Low-income taxpayers can have it waived or reduced.
Failure-to-pay penalty
Half the usual 0.5% rate while you’re on an approved plan, if you filed your return on time. It still stops at 25% of the unpaid tax.
Interest and refunds
Interest keeps adding up until the balance is paid, and the IRS applies future tax refunds to what you owe.
Fees are set by the IRS and change from time to time. We confirm the current amount before we set anything up. Here’s whether IRS installment payments are tax deductible.
What you get
What a Payment Plan Protects You From
Levies on wages and bank accounts
The IRS generally won’t take enforced collection action while a plan request is being considered, while the plan is in effect, for 30 days after a rejection or termination, or during an appeal. If a levy is already in place, see our wage garnishment help.
Your passport
Debt being paid on time under an approved plan, or covered by a pending plan request, isn’t certified to the State Department as seriously delinquent. Read how tax debt affects a passport.
A federal tax lien
A plan doesn’t remove a lien on its own. If you owe $25,000 or less, switch to automatic bank withdrawals that pay the balance within 60 months, and make three payments in a row, you can ask the IRS to withdraw the public lien notice.
Your tax refunds
The IRS keeps applying refunds to the balance until it’s paid, and you still make your scheduled payment that month.
Before you sign up
Is a Payment Plan the Right Fit?
A payment plan is the easiest agreement to get, which is exactly why it isn’t always the best one. You pay the whole balance plus interest. Before we set one up, we check whether something else would leave you better off.
Penalty abatement first
Better whenPenalties are a big part of the balance.Removing penalties before the plan starts lowers the balance you’re paying interest on and can bring it under the $50,000 simple-plan limit.
Offer in compromise
Better whenYou can’t realistically pay the full balance.An offer settles the debt for less than you owe. It takes more paperwork and isn’t right for everyone, but a plan that pays every dollar plus interest may not be either.
Currently not collectible
Better whenAny payment would leave you short on basic living costs.Hardship status pauses collection instead of locking you into a payment you can’t keep, which would only lead to a default.
Working with Anthem
How We Set Up Your Payment Plan
We confirm what you owe and what’s missing
We file a power of attorney, pull your IRS account transcripts, and check that every required return is filed, since most plans need you to be current first.
We lower the balance where we can
We look for penalty relief and check whether an offer or hardship status would serve you better than paying it all over time.
We pick the plan and build the case
For larger balances we prepare your financial statement the way the IRS measures it, so the monthly payment is one you can keep up with.
We set it up and keep it in good standing
We request the plan, usually with automatic withdrawals to keep fees and missed payments down, and step in if a notice like a CP523 ever shows up.
Who works your case
Our team includes Enrolled Agents who handle collection cases every day. Billy Fauller, EA, was an IRS Revenue Officer from 2009 to 2017 and now represents taxpayers in collection cases and IRS negotiations. Tina Lyon, EA, has worked hardship determinations, offers in compromise, Appeals proceedings and Revenue Officer matters.
Affordable payment plans are one of the results clients write about on BBB, Trustpilot and Google. You can read Anthem Tax Services reviews and watch client stories before you call.
Find out which payment plan you qualify for.
Get a free consultationGood to know
What Can Put a Payment Plan in Default
The IRS can change or end an installment agreement if you miss a payment, don’t pay another tax when it’s due, don’t give it a financial update it asks for, or gave it inaccurate information when the plan was set up. Not filing a future return on time causes the same problem.
If that happens, the IRS sends a CP523 notice saying it intends to end the agreement and collect by levy. You have 30 days from the date of the notice to act, and you may have to pay a fee to reinstate the plan. Here’s what happens if you default on an IRS payment plan, and your options if a plan is denied.
Getting the Help You Deserve With Your Tax Debt
It’s never a good idea to approach complex financial decisions without sound advice from people who really understand the choices you’re weighing. That’s why tax professionals are there, to give you the resources to reach the best possible understanding with the IRS. If you need help setting up an installment agreement for the last tax year or for any preceding years, contact Anthem Tax Services today to find out which payment plan fits your situation.
Keep reading
Related Installment Agreement Articles
Questions
IRS payment plan questions
How long can an IRS payment plan last?
It depends on the plan. A short-term plan gives you up to 180 days. A guaranteed installment agreement must pay the tax off within three years. For simple payment plans on balances of $50,000 or less, the IRS says most taxpayers get up to 10 years. A partial payment agreement can run until the IRS’s time to collect runs out.
How much does an IRS installment agreement cost?
Short-term plans have no setup fee. For a long-term plan, the IRS fee depends on how the plan is requested and paid: $29 or $69 for online requests, with or without automatic bank withdrawals, and $107 or $178 by phone, mail or in person. Low-income taxpayers can have the fee waived or reduced. Interest and some penalties also keep adding up until the balance is paid.
Can the IRS levy my wages or bank account while I’m on a payment plan?
Generally, no. The IRS says it won’t take enforced collection action while a payment plan request is being considered, while the plan is in effect, for 30 days after a rejection or termination, or while an appeal is pending. That protection lasts only while you keep up with the plan.
Does interest stop when I’m on a payment plan?
No. Interest keeps adding up until the balance is paid in full. The failure-to-pay penalty does drop, from 0.5% to 0.25% a month, if you filed your return on time and have an approved plan. That’s one reason we look at penalty relief before the plan is set up.
What happens if I miss a payment?
The agreement can go into default. The IRS sends a CP523 notice saying it intends to end the agreement and collect by levy, and you have 30 days from the notice date to act. You may have to pay a fee to reinstate it. We work with the IRS to get the plan back in good standing before the termination date.
Can I get a payment plan if I owe more than $50,000?
Yes. Balances over $50,000 usually need a non-streamlined agreement, which means a full financial statement and a payment based on what the IRS decides you can afford. Paying the balance down to $50,000 or less can open up a simple payment plan instead. If you can’t pay the full amount before the collection period ends, a partial payment agreement may fit.
Sources
Sources
- IRS: Payment plans and installment agreements
- IRS: Simple payment plans for individuals and businesses
- 26 U.S.C. 6159, installment agreements (guaranteed agreements and termination)
- IRS: Failure to pay penalty
- IRS: Understanding your CP523 notice
- IRS: Understanding a federal tax lien
- IRS: Revocation or denial of passport for unpaid taxes
- Internal Revenue Manual 5.14.2, partial payment installment agreements
Free consultation
Need a payment plan you can keep? Talk to us today.
Tell us what you owe and what you can afford each month. We’ll find the right plan and handle the IRS from there.
