What to expect when making an installment agreement with the IRS

On Behalf of | Dec 2, 2023 | Back Taxes or Tax Debt

Those who owe back taxes to the Internal Revenue Service (IRS) are often anxious to resolve the matter. The IRS can take action against a taxpayer’s personal property or their income. Other times, the IRS can convince federal authorities to pursue criminal charges against individuals with significant unpaid tax obligations.

The longer someone’s taxes remain in arrears, the more the IRS may demand in interest and penalties. Those who have accumulated a significant tax debt may owe far more than they can reasonably pay at one time. One of the tactics for resolving a sizable tax debt is to propose an installment payment arrangement.

Taxpayers can ask the IRS to make structured payments toward the balance they owe until they pay it in full. What can those with an installment agreement expect to occur once they reach a tentative agreement with the IRS?

They have protection from enhanced collection efforts

In general, once the IRS accepts a payment plan proposal, the organization will stop pursuing other aggressive collection efforts. Specifically, the IRS cannot levy property when there is an Installment agreement in place. Even the process of negotiating an installment agreement can temporarily prevent attempts to levy. Those who apply receive 30 days of delayed collection efforts.

They must commit to regular payments

The IRS offers both short-term and long-term payment plans. The amount of the debt and someone’s current income will determine which option is better. Those who can pay off their tax debt in 180 days or less won’t need to pay a fee to enter into an installment agreement. If the payment plan lasts longer than 180 days, there will be fees someone must cover in addition to the taxes, interest and penalties already due. Taxpayers will need to submit the minimum monthly payment each month by its due date. So long as they continue making payments as negotiated, they can keep their taxes in good standing despite being unable to pay their debt in full immediately.

Many taxpayers understandably find interacting with the IRS difficult. Seeking legal guidance can make it easier to successfully obtain an installment agreement for major income tax debts.