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An IRS Installment Agreement is a payment plan that allows eligible taxpayers to pay federal tax debt over time when full payment is not immediately possible.
Taxpayers must be current with required tax filings before the IRS will consider a payment arrangement. The IRS evaluates each request based on the amount owed, financial condition, and compliance history.
When reviewing a payment plan request, the IRS considers:
• Monthly income
• Allowable living expenses under IRS Collection Standards
• Assets and equity
• Total tax liability (including penalties and interest)
The monthly payment is generally based on the difference between income and allowable expenses.
Interest and penalties typically continue to accrue until the balance is fully paid.
For certain taxpayers below specific debt thresholds, the IRS offers streamlined payment plans that require less financial documentation. The maximum repayment period is generally up to 72 months, depending on current IRS guidelines.
Eligibility thresholds and procedures may change periodically based on IRS policy.
Businesses may qualify for streamlined arrangements if their outstanding balance falls within current IRS limits. Larger business liabilities require submission of detailed financial disclosures using IRS Form 433-B.
For higher balances or complex financial situations, the IRS requires detailed financial statements (Form 433-F, 433-A, or 433-B). These cases involve more in-depth review and documentation.
The IRS may examine:
• Real estate equity
• Vehicles
• Investment accounts
• Retirement accounts
• Business assets
Each case is evaluated individually.
While an Installment Agreement request is pending, approved, or recently denied, the IRS may file a Notice of Federal Tax Lien. However, levy action is generally suspended during certain review periods, including pending Collection Due Process hearings.
If a taxpayer demonstrates financial hardship and an inability to make payments, the IRS may classify the account as “Currently Not Collectible.” This temporarily suspends active collection.
CNC status is subject to periodic review, and collection may resume if financial circumstances improve.
IRS payment plans may involve setup fees, which vary based on method of application and income level. Low-income taxpayers may qualify for reduced fees.
To remain in good standing under an Installment Agreement, taxpayers must:
• Make payments on time
• File all future tax returns
• Stay current on new tax obligations
• Notify the IRS of address changes
Failure to comply may result in default of the agreement.
Installment Agreements are one of several potential tax resolution tools. Other options may include:
• Offer in Compromise
• Currently Not Collectible status
• Penalty abatement
• Bankruptcy (in limited qualifying circumstances)
Eligibility for each option depends on specific legal and financial factors.
If you are unable to pay your tax liability in full, Tenina Law can review your financial situation and discuss potential payment plan options with the IRS.
We assist individuals and businesses in preparing financial disclosures, negotiating payment terms, and maintaining compliance with IRS requirements.
Consultations are provided at no charge. Representation terms are discussed in advance.
Attorney licensed in California with over 20 years of legal practice in civil litigation, tax law, bankruptcy, and corporate matters. Each case is evaluated on its facts and applicable law.
We provide personalized attention, clear communication, and ongoing case evaluation. Client experiences vary based on the circumstances and results depend on case-specific facts and applicable law.