Tax Debt Relief & Installment Agreement

Last updated on February 21, 2023

One of the most used IRS tax debt resolution plans is the Installment Agreement. There are many kinds of Installment Agreements based on the amount of tax debt owed. Each has its unique qualifying factors. These agreements allow a taxpayer to pay the entire tax debt amount in fixed monthly installments over a specified period of time. Taxpayers that cannot afford to pay the entire debt amount in a lump sum can choose an Installment Agreement to pay their tax liability comfortably.

Even though taxpayers get the benefit of paying the debt over a long period of time, the IRS continues to charge interest and penalties on the amount that remains to be paid. That means the longer a taxpayer takes to pay the full amount of tax debt, the more he or she will need to pay.

Before choosing an Installment Agreement, it is important to consider other payment plans offered by the IRS such as Offer in Compromise and Currently Not Collectible. If taxpayers under tax debt cannot pay the full debt amount, they should not automatically opt for an Installment Agreement. Instead, they may look to get their tax debt amount reduced or postpone payment of it.

Installment Agreement is a widely used payment plan for those taxpayers who have the financial capability to pay the entire back taxes, but wish to pay it in installments to keep their finances stable.