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FAQs About IRS Installment Agreements


According to the IRS, about 85 percent of Americans voluntarily pay their taxes in full and on time. That figure, although high, creates a tax gap of over $400 billion per year.

Recent budget cuts have reduced the size of this federal agency, but it’s still the world’s largest collection agency. Furthermore, it has tools at its fingertips, such as wage garnishment and bank account levy, that private debt collectors cannot use unless they obtain court orders.

If you fall behind on income tax payments, the IRS will eventually come after you, and come after you hard. An installment agreement is usually a good option if the taxpayer doesn’t qualify for tax discharge in a Chapter 7 bankruptcy or similar relief. Our Irvine debt relief lawyer fields lots of questions about installment agreements. We answer some common ones in this post.

Is There a Difference Between a Payment Plan and an Installment Agreement?

Surprisingly, yes. A payment plan is a short-term repayment plan that usually lasts about 90 days. An installment agreement is a long-term repayment plan.

You can apply online for a short- or long-term plan via the IRS’ Online Payment Agreement tool if you meet the following criteria:

  • Short-Term Payment Plan: You owe less than $100,000 in combined tax, penalties, and interest, you’ve filed all your tax returns, and you can finish paying off your tax debt in either 90 days or less, or 180 days or less.
  • Long-Term Payment Plan: You owe $50,000 or less in combined tax, penalties, and interest, you’ve filed all your tax returns, and you may need more than 180 days to pay your tax bill.

If the tool determines that you’re ineligible, the IRS says you may still be able to apply for a tax installment plan by either filing Form 9465 or calling the IRS’ main hotline to apply by phone.

Do I Need a Lawyer?

Technically no, at least for the application. However, as previously mentioned, it’s usually a very good idea to speak with an Irvine debt relief lawyer about your legal options before you file. You don’t know what options you might have until you ask. Never assume it’s an installment agreement or nothing.

Furthermore, lawyers help taxpayers prepare offers. Usually, the monthly payment must be sufficient to retire the tax debt before the statute of limitations expires. Unrepresented taxpayers pick monthly payment amounts at random and hope the IRS accepts them. Attorney-assisted installment agreement applications give taxpayers the peace of mind they sorely need.

Can I Change the Payments?

The IRS’ Online Payment Agreement tool lets you change your monthly payment amount, change the monthly due date, sign up for automatic withdrawals and reinstate a payment plan you’ve fallen behind on.

Once again, the modified payments must meet minimum legal requirements. So, we usually suggest that, at first, people aim high to retire their tax debt sooner. Then, if they can’t make the payments, they can reduce them.

Quick payment is essential because the IRS keeps adding penalties and interest on unpaid balances, even if the taxpayer is making payments as agreed. Generally, only a bankruptcy prevents the IRS from adding to your tax debt with each passing day.

Count on a Thorough Lawyer

Regardless of your financial problems, there’s usually a way out. For a free consultation with an experienced debt relief lawyer in Irvine, contact The Law Office of Charles A. May.


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