What it is
An installment agreement is a payment plan with the IRS. You pay what you owe in monthly payments instead of all at once.
While the plan is in place, the IRS generally can’t take money from your paycheck or bank account. That alone can change everything for a family.
First, is the number right?
A payment plan means you’re agreeing to pay the balance. So before you sign up, the balance needs to be right. We pull your IRS records and check them. Is there a return the IRS filled in for you? Are there penalties that should come off? Is any of the debt too old to collect? Every dollar we remove is a dollar you don’t pay each month.
How the IRS sets the payment
For smaller debts, the IRS mostly looks at how much you owe. If you’re under their limits, you can often pick a payment that pays it off in time. They won’t dig into your bills.
For bigger debts, it’s different. The IRS often asks for a full list of your income, bills, bank accounts, and what you own. Then they decide what you “can” pay. They use set limits for many living costs, like food and housing. If your real costs are higher, you have to show why.
This is where people get hurt. The first number the IRS asks for is often based on rough guesses about your life. We show them your real numbers.
Does it fit you?
A payment plan usually makes sense when:
- the balance is right, or we’ve already fixed it
- you can pay it off before the IRS runs out of time to collect
- your income is steady enough to make the same payment every month
If you can’t pay it off in time, other options may fit better. Those include a plan that pays only part of it, a settlement, or a pause on collection.
How we pursue it
We check the bill first. No sense in a payment plan for money you don’t owe.
We pick the right kind of plan. Small changes matter. Sometimes paying a little more, or a little less, can put you under a limit. That can mean less paperwork, and fewer questions about your money.
We build the numbers. If the IRS wants a full money review, we prepare it. We make sure every real cost is counted.
We deal with the IRS. You don’t have to take their calls. We set up the plan and confirm the terms in writing.
What it costs
There’s no setup fee for a short-term plan. A monthly plan set up online costs $29 with automatic payments, or $69 without. By phone, mail, or in person, it’s $107 or $178. If your income is low, the fee is waived with automatic payments. Without them, it’s $43, and that may be paid back to you.
What to watch out for
- Penalties and interest keep growing until it’s paid off.
- Missing a payment can end the plan. So can not paying new taxes on time.
- The IRS can file a lien. A lien is a legal claim on your property. It can still happen while you’re on a plan.
- New taxes count too. If you’re self-employed, you need to make your quarterly payments. Otherwise the next year’s bill can break the plan.
