In 2020, the IRS reported being owed over $114 billion in back taxes, penalties, and interest. If you're among the millions of Americans with tax debt, an installment agreement can provide a manageable path to resolution while protecting you from aggressive collection actions.
The IRS doesn't take delinquent payments lightly. Late payments are subject to interest and penalty fees, and a history of late filing could disqualify you from payment plan options.
An IRS installment agreement is a payment plan that allows individuals and businesses to pay their tax debt over time through manageable monthly payments. This debt forgiveness option helps you navigate the collection process while avoiding more severe consequences like asset seizure.
Duration
180 days or less
Eligibility
Individual taxpayers only
Setup Fee
$0
Pay your tax debt in full within 6 months with no setup fees
Duration
More than 6 months
Eligibility
Individuals and businesses
Setup Fee
$31 online / $107 other methods
Automatic monthly payments from your bank account with lower fees
Duration
More than 6 months
Eligibility
Individuals and businesses
Setup Fee
$130 online / $225 other methods
Manual monthly payments with higher setup fees
Individuals: Owe $50,000 or less
Businesses: Owe $25,000 or less in payroll taxes
Lowest setup fees - apply online when possible
Apply by phone, mail, or in-person for any amount owed
Higher setup fees but available for all debt amounts
Only the "pay now" option avoids additional costs. All payment plans accrue penalties and interest during the repayment period.
Cap: 25% maximum
Applied when you don't pay taxes owed by the due date
Cap: 25% maximum
Applied when you don't file your tax return on time
Cap: No cap
Federal short-term rate plus 3%, compounded daily
Small businesses are eligible for installment agreements with minor differences in stipulations and application processes compared to individual taxpayers.
If your income is at or below 250% of the federal poverty level, you may qualify for reduced or waived setup fees. Submit Form 13844 if not automatically identified.
You have 30 days to make a missed payment and keep your agreement active. However, this doesn't delay your next payment, and after 30 days, the IRS can cancel your agreement.
Consequences of default: Reinstatement at IRS discretion, additional fees, potential asset seizure, or forced bankruptcy.
Use the Online Payment Agreement Tool to modify your existing installment agreement:
Navigating tax debt can feel overwhelming, but you're not alone. Our experienced team at Ideal Tax has helped thousands of clients successfully establish installment agreements and resolve their tax problems. We can evaluate your situation, help prepare your application, and determine if you qualify for alternative IRS Fresh Start Programs.
Don't let tax debt control your life. With the right installment agreement, you can transform overwhelming debt into manageable monthly payments while stopping IRS collection activities. Our experts are here to guide you through every step of the process.
Start Your Payment Plan Today