Transcription
Will the IRS Take Payments?
The IRS will take payments, and an installment agreement is the most common resolution for unpaid federal taxes. It is not always the best option, but for most people with a balance they cannot pay in full, a payment plan is realistic and available.
The most common type is the streamlined installment agreement. If you owe $50,000 or less in combined tax, penalties, and interest, you can generally get a 72-month payment plan without submitting a detailed financial statement. If you set it up as a Direct Debit Installment Agreement (DDIA), you avoid the additional user fee and become eligible to request a lien withdrawal after three consecutive payments — which matters if the lien has affected your credit.
For larger balances or cases where streamlined terms do not work, the IRS offers a Partially Paying Installment Agreement (PPIA). With a PPIA, your monthly payment is based on what the financial analysis says you can actually pay — not what it takes to pay the balance in full. The IRS agrees to accept less than full payment over the collection statute period, knowing the balance may not be fully paid before the Collection Statute Expiration Date (CSED). To qualify, you submit a full financial statement — Form 433-A or 433-B — and the IRS reviews your income, expenses, and assets.
One thing an installment agreement does not do: it does not prevent the IRS from filing a Notice of Federal Tax Lien. For balances over $10,000, the IRS will generally still file a lien even once you are on a payment plan. The lien is a public record and affects your credit. A payment plan keeps levies and wage garnishments from starting, but the lien is a separate issue.
Interest and the failure-to-pay penalty continue to accrue during an installment agreement. The failure-to-pay penalty drops from 0.5% to 0.25% per month while a valid agreement is in place, but it does not stop. This is worth factoring into the math when comparing an installment agreement to other options.
If you default — miss a payment, incur a new tax balance, or fail to file a required return �� the IRS can terminate the agreement and resume collection. Getting reinstated is possible but requires going through the process again.
Book a free 15-minute call or call (619) 378-3138 to understand your options.
