IRS Expands Installment Agreement Options

If you are unable to pay the balance of tax owed when filing your tax return, the IRS provides a number of payment options. The most prevalent option used by taxpayers is an installment agreement.

If you owe the IRS less than $50,000, you may qualify for the streamlined installment agreement. Under this agreement, you have up to 72 months to pay the balance of tax owed. You must be current with your tax filings, but there are no other requirements. Almost all taxpayers that meet these requirements are automatically accepted by the IRS.

If you owe the IRS more than $50,000, you must apply for an installment agreement and complete Form 433-H (statement of financial position). Based on your financial position, the IRS will determine the amount of debt that qualifies for an installment agreement.

However, during the Covid-19 shutdown, the IRS implemented a new option: the Non-Streamlined Installment Agreement. This allows taxpayers that owe up to $250,000 to enter into an installment agreement without financial disclosure. In order to qualify, you must be an individual, pay the balance within 84 months (or by statute deadline) and pay by direct debit.

This was a temporary measure enacted during Covid, but it worked so well that the IRS decided to permanently implement it when the pilot program ended in January 2023. Unlike the streamlined option, the IRS will likely file a federal tax lien until the tax owed is paid.

You can visit the IRS website for more information on installment agreements.