What You Need to Know

An installment agreement is an IRS tax debt payment plan that allows taxpayers to pay their debt over time in monthly installments. Taxpayers who do not have to have the ability to pay their back taxes in one lump sum can

choose to pay the debt with an Installment Agreement. For those that qualify, the IRS also offers installment agreements that accommodate a taxpayer’s

financial situation.

Eligibility Requirements

• There are many kinds of installment agreements; each designed to suit taxpayers’ different payment needs.

• Every installment agreement has certain qualifying factors. The IRS reviews the taxpayer’s financial situation to determine their ability to pay.

• For tax debt amounts of $10,000 or less, the IRS does not require a financial statement to determine ability to pay.

• The IRS evaluates the income, assets, and expenditures of a taxpayer to design a comfortable and realistic payment agreement.

• For larger tax debt amounts of $50,000 or more, the IRS requires a financial statement to determine the payment that a taxpayer will make each month.

To do Before Applying for an Installment Agreement

• You must file your past tax returns. • Include your SSN, name, address, daytime phone number, tax years

and return type on your every payment. • Inform the IRS if your address, filing status, name or other contact

information changes. • Pay the scheduled payments on time and at least the minimum

amount determined. • Remember, any refunds you’re entitled to after qualifying for an

Installment Agreement will be applied to your tax debt.

Eligibility Requirements for different plans

Individuals who owe $10,000 or less in tax debt may use the Guaranteed Installment Agreement to pay their back taxes. It allows a taxpayer to pay the debt in fixed installments over 36 months or less.

Those who owe $25,000 or less in tax debt may use the Non-Disclosure Installment Agreement to resolve their tax debt. Taxpayers that qualify for this payment plan can pay their entire tax debt in 72 months or less.

If the tax debt is more than $25,000, a payment plan can be established by negotiating the particulars of the case with the IRS. Larger liabilities may take more time to pay and, as such, may require a unique resolution plan with the IRS.

Different types of Installment Agreements

• There are many types of installment agreements, which may be chosen based on the amount of tax debt owed and the taxpayer’s financial ability.

• Taxpayers must choose the correct Installment Agreement to pay their tax debt for successful and early resolution of tax debt.

• Let us take a look at some of the popular Installment Agreements:– Non-Disclosure Installment Agreement– Fresh Start Streamlined Installment Agreement– Partial Payment Installment Agreement

Non-Disclosure Installment Agreement

• Taxpayers that owe $25,000 or less in tax debt can resolve their back taxes through a Non-Disclosure Installment Agreement.

• Under this payment plan, taxpayers can pay the amount of the tax debt in installments without sharing their extensive financial details.

• The amount of payment to be made in monthly installments is calculated by dividing the total tax debt by the number of months required to pay it back.

• The maximum term for paying the debt under this payment plan is 72 months.

• Taxpayers that cannot pay their tax debt in a single payment can use the Non-Disclosure Installment Agreement to achieve a simple resolution.

Fresh Start Streamlined Installment Agreements

• Under the Fresh Start initiative, the IRS has introduced flexibility in Installment Agreements.

• For this agreement, the IRS has increased the maximum dollar criteria from $25,000 to $50,000, and increased the maximum term for debt payment from 60 months to 72 months.

• Taxpayers that apply for this Agreement do not need to share a financial statement with the IRS, but they may need to share certain financial information during the resolution process.

• There are two kinds of Streamlined Installment Agreement: one for those who owe $25,000 or less, and the other for those who owe $25,001 to $50,000.

Partial Payment Installment Agreement

• Under the Partial Payment Installment Agreement, taxpayers do not necessarily need to pay the entire amount of tax debt.

• Partial Payment Installment Agreement provides taxpayers a way to get their tax debt amount reduced so that they can pay the balance and resolve their debt.

• Installment Agreements are a popular method of tax debt resolution because many taxpayers fulfill their eligibility criteria.

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