IRS Streamlined Installment Agreements
How to Make Monthly Payments on Tax Debt Without a Financial Disclosure

If you don’t take action to resolve your past due tax balance, the IRS has the authority to levy a host of enforcement actions against you. These actions could include seizing your property or taking a portion of your paycheck before you receive it. The good news is that there are several IRS tax resolution options you can use to your advantage, including applying to a streamlined installment agreement (SIA). 

This relief option is part of the IRS’s Fresh Start initiatives, which have been making it easier for citizens to find tax relief for over 10 years. Some of the biggest reasons you might want to opt for a streamlined installment agreement are that the payment terms are flexible, the arrangement will protect you from the collection efforts mentioned above, and you don’t have to provide detailed financial information to get approved. 

Learn more about this crucial IRS tax relief option and how our tax resolution experts at Damiens Law can help you get right with the IRS below. 

Key Takeaways

• What is a streamlined installment agreement? Monthly payment plan that doesn’t require financial details to set up.
• Benefits – Protection from IRS collection actions, flexibility with your payment terms, and no need to disclose specific financial information.
• Terms – This payment plan requires you to fully repay what you owe within 72 months or before the collection statute expiration date.

What is a Streamlined Installment Agreement?

A streamlined installment agreement is a type of arrangement with the IRS that allows a taxpayer with unpaid taxes to pay off what they owe in monthly payments over a specific period of time. The purpose of this arrangement is to allow the IRS to collect what they’re owed and the taxpayer to avoid further collection efforts.

This type of payment plan simplifies tax debt repayment by making it extremely easy on both the IRS and the taxpayer. In general, as long as you can pay off what you owe within six years, the IRS won’t request further financial information or details about your assets.

One of the key highlights of applying for this type of debt relief is that there is far less paperwork involved, which means you’re likely to get approved faster. Another great thing about this type of agreement is that it can help you potentially avoid IRS liens.

Streamlined Vs. Other Types of Installment Agreements

A streamlined installment agreement is only one of the many types of payment plans you can apply for through the IRS. Here’s how they differ from other payment options:

• Direct debit – A direct debit IRS payment plan allows taxpayers to pay off their debt with automatic bank withdrawals each month. It’s possible for you to make your streamlined installment agreement payments via direct debit.
• Partial payment installment agreement – A partial payment plan allows taxpayers to pay back as much of their tax debt as possible before the statute of limitations runs out on collections. But it also forgives whatever portion the taxpayer can’t pay by that point.
• Guaranteed – A guaranteed streamlined agreement is a good option if you owe less than $10,000, can pay it off within three years, and have a history of compliance. These arrangements are a subcategory of streamlined installment agreements because they don’t require a collection information statement.
• Non-streamlined installment agreement – Allows taxpayers who owe over $50,000 to set up payments with the IRS. But generally, they must file a collection information statement and may need to meet other criteria. Briefly, the IRS offered these arrangements to taxpayers owing up to $250,000 without requiring a financial statement, but at the time of writing, that option may no longer be available.

Benefits of a Streamlined Payment Plan

One of the biggest benefits of agreeing to a streamlined payment plan is that you won’t continue to incur new IRS collection actions. IRS Interest and tax penalties will continue to accrue until your balance is paid off, though. Note that the only penalty that may accrue is the failure to pay penalty, but it drops to 0.25% per month and caps out at 25% of the assessed balance.

Another advantage of a streamlined payment plan is that there isn’t any financial disclosure or collection information statement required for approval. In most cases, you will be able to avoid an IRS tax lien by agreeing to this type of plan. Best of all, this type of tax payment plan offers flexible payment terms that extend up to 72 months.

Eligibility Requirements

Not every taxpayer who owes a tax debt is eligible to apply for a streamlined installment agreement plan. Below, we’ll go over the various eligibility requirements you’ll need to meet to be approved for this type of tax debt relief.

Categories

Prior to the Fresh Start initiatives, the maximum dollar threshold for streamlined installment agreements was $25,000, but it has since been raised to $50,000. The maximum term has also been extended from 60 months to 72 months.

Balances of $25,000 or Less

The first category you can qualify for requires you to owe no more than $25,000 and be able to pay off your debt in full within 72 months. This 72-month period must fall prior to the Collection Statute Expiration Date. Taxpayers must be current on all their tax filings and up-to-date on estimated tax payments.

Balances Between $25,001 and $50,000

To qualify for the second category of streamlined installment agreement relief, you must owe between $25,001 and $50,000. With this plan, you also need to be able to pay off your debt in full within 72 months. Taxpayers must be current on all their tax filings and up-to-date on estimated tax payments. 

Notably, you must agree to direct debit payments if you fall into this category – you can set up direct debits to come out of your bank account monthly or ask your employer to do payroll debits (where your employer withholds the money from your check and sends it to the IRS).

Application Process

Applying for a streamlined installment agreement involves gathering the necessary information, obtaining the necessary forms, and properly submitting everything to the IRS.

Step 1: Verify Tax Balance and Compliance Status

First, you need to verify your overall tax balance before you make an installment agreement request. You can do this by logging into your IRS tax account and reviewing your balance or getting in touch with the IRS. While doing so, you’ll also want to verify your compliance status. Make sure that you’re up to date when it comes to filing your returns and making any estimated tax payments. If you aren’t, then you’ll first need to get caught up and compliant.

Step 2: Complete IRS Form 9465 (Installment Agreement Request)

Next, you need to complete IRS Form 9465. You can complete this form either digitally online or on paper. You can download the correct forms online and print them off if you want to complete a hard copy of the form.

Step 3: Submit Application (online, by mail, or by phone)

Next, you can submit the application either by sending your copy through the mail to the Department of Treasury address in your jurisdiction, over the phone, or online. In general, applying online is the fastest and most preferable option. It also leads to the fastest processing times. You can apply online through the IRS’s Online Payment Agreement tool, or if applying for the current year’s taxes, you may be able to attach a copy of Form 9465 to your e-filed tax return.

Costs and Fees

If you apply online and set up direct debit payments, the set-up fee is just $22. If you set up direct debit and apply on the phone, through the mail, or in person, the fee is $107. Both fees may be waived if you qualify as low-income. 

If you don’t set up direct debits, the fees are as follows: online – $69; phone, mail, or in-person – $178; or low-income – $43 with the possibility for reimbursement. 

Tips for Success

The best way to ensure that your installment agreement plan works is to make payments on time when they are due. Defaulting on your payments is a major issue that could even result in your plan being canceled.

It’s also a great idea to consider monitoring your IRS account regularly to make sure that your payments go through on time. If any problems arise, then you’ll want to know how to resolve an IRS issue.

If you ever experience an inability to pay or a financial hardship during your plan, you must contact the IRS immediately.

Alternatives for Those Who Don’t Qualify

Are you currently considered ineligible for a streamlined installment agreement? If so, then one option you have is to pay down your tax debt until it’s below $50,000. At that point, you may be eligible for the agreement. You may also want to request penalty abatement to lower your balance owed.

Another option you have is to consider other IRS tax resolution options. In particular, you can request monthly payments on a larger tax balance, but you will generally need to file a financial disclosure.

An offer in compromise agreement allows the taxpayer to pay less than the full tax debt in exchange for timely, consistent payments. A partial pay agreement is similar in that it allows the taxpayer to pay off a portion of their balance before having the rest forgiven.

If making any sort of payment would put you in financial distress, then your best option is to consider filing for currently noncollectible status. This status alerts the IRS that you aren’t able to make payments, so they won’t continue to attempt to collect from you.

FAQs

Do you have more questions about streamlined installment agreements, applying for them, or your tax debt relief options? If so, then talking with a tax resolution specialist is your best option to ensure that you get advice that considers your unique circumstances. That said, we’ll provide some basic answers to some general questions below.

Can businesses apply?

Out-of-business sole proprietors may qualify for a streamlined installment agreement. 

In-operation businesses can apply for an IRS installment agreement to resolve income taxes, payroll taxes, or some civil penalties, but the terms vary. Typically, the IRS requires a collection information statement for any in-operation business that owes more than $25,000 or needs more than 24 months for repayment.

What if I miss a payment?

It’s critical that you don’t miss a payment on your streamlined installment agreement because if you do, you risk invalidating the entire payment plan. Thankfully, taxpayers can usually miss one payment a year without default. Generally, you just need to make up the payment within 30 days.

Will the IRS file a lien?

The IRS has the authority to file a lien against you even if you’re currently on a streamlined installment agreement with them. This lien is designed to protect the tax agency’s best interests. While a levy actually takes your property, a lien will simply remain in place as a legal right until you pay off what you owe.

Streamlined Installment Agreements with the IRS

Streamlined installment agreements are usually a great option for citizens who want to repay their past-due tax balance but need some time to do so. A streamlined agreement might be preferable to other types of tax debt relief options if you’re looking for flexible payment terms and don’t want to have to provide a plethora of financial documentation to secure the agreement.

The best way to ensure you get approved for this type of debt relief is to get in touch with the IRS as early as possible about paying back your debt. Before you get in touch, though, it might be best to run your entire tax situation by a tax professional.

Here at Damiens Law, our team of tax debt experts has been focusing on providing tax relief to clients since 2011. Schedule a short, no-obligation 15-minute discovery call with our team now to learn more about your tax options today.