Tax Installment Agreement

• A tax installment agreement is a monthly payment plan set up between the IRS and the taxpayer. There is a $105 fee for setting up an installment agreement. The fee is reduced to $52 if the taxpayer has the monthly payments deducted directly from his bank account. If the taxpayer defaults and wants to reinstate or modify an existent agreement, an additional $45 fee will be charged by the IRS.
  
  

How to Request an Installment Agreement

• Taxpayers can fill out an online payment agreement application or mail an installment agreement request. People can apply online if the amount owed to the IRS is not greater than $25,000 and all of their tax returns have been filed. The IRS will provide the status of the application within 10 days. The installment agreement request form can be mailed to the IRS. It may take about 30 days to find out if the request was approved.
  
  

Guaranteed Installment Agreements

• To be eligible for the guaranteed installment agreement, the total unpaid tax debt cannot be greater than $10,000. During the past five years, the person must have filed all of his tax returns, paid any taxes owed during that time, and not previously entered into a guaranteed installment agreement with the IRS. The maximum payment period for this type of agreement is three years.
  
  

Streamlined Installment Agreements

• People who owe $25,000 or less in taxes can apply for the streamlined installment agreement. The balance must be fully paid off in 60 months or less. The minimum monthly payment is calculated by dividing the amount of taxes owed by 50. After reviewing the application, the IRS will make a final determination as to the amount of the monthly payments and the duration of the payment plan.
  
  

Partial Payment Installment Agreements

• This type of agreement allows people to negotiate a tax settlement with the IRS to pay off less than what is owed. The person must complete a collection information statement disclosing his financial situation. The IRS uses that information to decide the monthly payment amount and length of the plan. If the person completes the payment plan, then the remaining unpaid taxes will be forgiven.
  
  

Non-Streamlined Installment Agreements

• The non-streamlined installment agreement is available for people who owe more than $25,000 in taxes or who may need more than five years to pay off their taxes. The person is required to complete a collection information statement so that the IRS can verify income, expenses and assets. The IRS may recommend the sale of certain assets to expedite the payment of taxes. It is always advisable to consult with a tax professional when trying to negotiate a tax settlement with the IRS.