IRS installment plans

If you cannot pay your tax liabilities in full, the IRS may agree to let you pay it off gradually in monthly installments as part of an IRS installment agreement (also referred to as an installment plan).

The IRS understands that it cannot take money that doesn’t exist. The agency also understands that allowing taxpayers to pay off their back taxes over time can help people avoid undue financial hardships. And since the IRS collects interest on past due amounts, it does not actually burden the agency financially to allow taxpayers to pay back taxes in installments. Installment agreements are essentially a “win-win,” helping both the IRS and the taxpayer to achieve their respective goals.

It’s important to know that the IRS typically charges interest on the underlying tax balance. However, payment plans are frequently very helpful, particularly if your tax bill is large and/or you’re on a tight budget – in much the same way having a monthly car payment is often more practical and affordable than paying for a new car entirely upfront.

For balances that are between $10,000 and $25,000, the minimum payment will typically be the balance due divided by 72. IRS collection personnel are generally reasonable people. If a taxpayer feels they won’t be able to afford the monthly amount the IRS is proposing for an installment plan, the taxpayer can appeal the matter to the IRS.

Hiring a tax attorney or qualified tax professional can also help. With deep knowledge of the IRS’s rules and regulations, an experienced tax professional can help ensure the taxpayer is receiving the best possible terms on the installment plan. Additionally, any tax pro worth their salt will also evaluate the taxpayer’s case thoroughly, to see if there might be other IRS tax assistance programs that are even more financially beneficial to their client than an installment agreement.

If you don’t communicate with the IRS, they can take further action against you, including wage garnishment, bank levies, and property liens. Setting up an installment plan will help keep you on good terms with the IRS.

Generally, it takes four to six weeks to finalize an installment agreement and set up the payment method. The payment method you choose can affect the turnaround time. For example, the process can take longer if you can’t pay by direct deposit or payroll deduction.

Typically, IRS payment plans can run for up to six years when you file your taxes.

Our tax attorneys and licensed professionals have helped thousands of clients resolve their tax problems through installment agreements and other powerful tax assistance programs offered by the IRS. Our team will work on your behalf, fighting to get you the best possible deal with the IRS so you can put your tax problems to rest. For more information on installment agreements or other tax relief options, we welcome you to call us for a free consultation.