These are difficult and exceptional times faced by our country with all our concerns about COVID-19 and the resulting economic impacts.  In times like these, it is easy to fall behind on our tax obligations through no fault of our own. If you find yourself in that situation, the best course of action is to not ignore the problem in hopes that it will go away (it won’t). Even though the IRS rebates and deferrals won’t reduce the taxes owed, there is a tried-and-true way to ease your tax liabilities with the Installment Agreement.

Installment agreements (“IA”) with the IRS are an inexpensive way to pay your income taxes over time. Tax liabilities that can be handled by Installment Agreement include both Income and Payroll liabilities. There is a user fee ranging from $31 to $225 in some circumstances. During the term of an IA, you can always make extra or larger payments from time to time. In fact, it’s a good idea to do that because interest and penalties continue to accrue during the term of the payout.  

Qualified taxpayers (or their representatives) may apply for an IA on-line, but only if the unpaid balance is less than $50,000 (if you are intending to pay in more than four months) or $100,000 (if you are intending to pay in four months or less).To apply online, go to:

Installment agreements for amounts under $10,000 are known as “guaranteed” installment agreements and are generally approved by the IRS on request and with no further requirements imposed. IRS will also make streamlined IAs available to small businesses with $50,000 or less in unpaid tax. Small businesses will have 24 months to pay. Small businesses with an unpaid assessment balance greater than $50,000 would qualify for the streamlined Installment Agreement if they pay down the balance to $50,000 or less. Small businesses will need to enroll in a Direct Debit Installment Agreement to participate.

Streamlined installment agreements may be approved for taxpayers if the aggregate unpaid balance of assessments is $50,000 or less. The minimum payment amount is determined by dividing the balance due by 72. The IA must resolve all balances due prior to the expiration of the “Collection Statute End Date” (CSED). Streamlined IAs involve no IRS financial review and no interaction with an IRS employee. Taxpayers can pay down the balance due to qualify for agreements under $50,000.

The IRS can, and will, file a notice of federal tax lien during an installment payout, which can affect your credit. Once filed, the IRS may withdraw a notice of lien, but such withdrawals are rare.  IRS will withdraw a lien in most cases where the taxpayer enters into a direct debit IA (DDIA), but only where the unpaid assessment is $25,000 or less and only after a probationary period demonstrating that the direct debit payments will be honored.

If you would like help with an IRS installment agreement, please call us at 713-333-0555. We are here to help you.