Types of IRS Installment Agreements
There are four main types of IRS installment plans available to individuals. The IRS updates the requirements and criteria for payment plans periodically, and these are current as of 2018.
Guaranteed Installment Agreements are appropriate for individuals with back tax debts of $10,000 or less, not including penalties and interest. Guaranteed agreements are automatically approved if you meet the criteria and can afford a minimum monthly payment of the total balance due, divided by 36 months. Guaranteed installments must be paid off at the end of the three-year term or before the 10-year statute of limitations expires. The IRS will not file a lien if you have a guaranteed installment agreement.
Streamlined Installment Agreements have been extended to individual taxpayers who owe $100,000 or less, including penalties and interest. As part of the IRS “Fresh Start Program”, you are not required to make full financial disclosure to secure a streamlined agreement. The repayment term for a streamlined agreement is up to 72 months (6 years). However, 84-month repayment terms are currently available, with conditions. As with the guaranteed agreement, you are protected from a federal tax lien while in a streamlined installment agreement. For debts over $50,000, however, you must arrange direct debit payments or a payroll deduction to avoid a lien.
Non-Streamlined Installment Agreements (Financially Verified Installment Agreements) apply to taxpayers who a) owe more than $100,000 or b) owe over $50,000 but choose not to pay by direct debit or payroll deduction. Unlike guaranteed and streamlined agreements, these agreements cannot be automatically approved. The repayment term isn’t pre-determined and can be negotiated. If you have a non-streamlined installment agreement, it is likely that the IRS will file a lien to protect their claim.
Partial Payment Installment Agreements are also negotiated, rather than automatically approved. These installment agreements are for taxpayers who cannot afford to pay their full debt within the timelines set out by the other agreements. The monthly payment is based on proven affordability. Under the terms of these agreements, the IRS may file a federal tax lien and they will re-evaluate your case every two years.
Different IRS payment plans are available to businesses. If your business owes back taxes, you may be eligible for one of the following:
- A Streamlined Business IRS Payment Plan
- An In-Business Trust Fund Express Business IRS Payment Plan
- A Non-Streamlined/Routine Business IRS Payment Plan (Financially Verified)
- A Partial Business IRS Payment Plan.
Business installment plans entail criteria, repayment terms, thresholds and requirements that differ from individual plans. For more information, request a free consultation with Precision Tax Relief.
IRS Payment Agreement Eligibility
The IRS would prefer to recover your debt through installment payments than not at all. In recent years, they have reduced barriers to approval of payment plans.
For smaller debts, application is comparatively straightforward and there can be little to no financial disclosure required. For higher debts, the IRS will demand more information on your financial situation and seek greater guarantees of your ability to pay.
The most scrutiny will be applied if you are seeking a partial payment installment agreement, because of the extended repayment term and reduced monthly installments. For an IRS partial payment plan, you must prove that you are unable to pay more through equity or future income.
In general, the criteria for an individual IRS installment agreement are as follows:
- Your tax debt plus penalties and interest are within the limits of the installment agreement for which you are applying;
- You have filed all required tax returns;
- No new tax debt has been accrued;
- You are not currently in another agreement for payment of late taxes;
- In the past five tax years, you have not had a previous installment agreement (there are some exceptions);
- You are not in bankruptcy proceedings;
- Your proposed payment schedule will clear the debt within the time permitted, or before the statute of limitations on collections expires.
When you work with Precision Tax Relief, we will expertly analyze your financial position to recommend and negotiate an affordable IRS payment plan. Our clients trust us to work for their best interests. That’s why we have a 98% satisfaction rating in more than 700 reviews — more than any other tax relief agency.
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