IRS Installment Agreement

Detailed Explanation

The IRS offers several types of installment agreements (IAs), each with different qualification thresholds, financial disclosure requirements, and setup fees. (1) Short-Term Payment Plan: balance under $100,000, pay in full within 180 days, no setup fee, online application via IRS Online Account. (2) Guaranteed Installment Agreement: balance under $10,000, pay in 36 months, automatic acceptance for compliant taxpayers, $0 to $130 setup fee. (3) Streamlined Installment Agreement: balance under $50,000 (combined tax, penalty, interest), pay in 72 months OR by the collection statute expiration date (CSED) whichever is sooner, no detailed financial statement required, $31 to $225 setup fee. (4) Non-Streamlined Installment Agreement: balances over $50,000 require Form 433-F (basic) or Form 433-A (full) financial disclosure, IRS evaluates ability to pay against IRS Collection Financial Standards. (5) Partial Payment Installment Agreement (PPIA): for taxpayers who cannot pay the full balance within the CSED, monthly payments are based on disposable income, and the unpaid balance is forgiven when the CSED expires. Setup fees are reduced or waived for low-income taxpayers (under 250% of federal poverty level). While an IA is active, interest and the failure-to-pay penalty continue to accrue, but the failure-to-pay penalty is reduced from 0.5% to 0.25% per month. Defaulting (missing a payment, filing a return late, or owing additional tax for a future year) terminates the agreement and resumes collection. Online setup at IRS.gov for streamlined agreements; non-streamlined requires Form 9465 with Form 433-F.