Paying back your IRS debt in installments is one of the best ways to pay off unresolved debts. For many, it is the best road out of stressful IRS negotiations and penalties. There are several types of installment agreements, depending on your level of indebtedness. Here are two types for people with debt 10,000 dollars or less and 25,000 dollars or less.
The Guaranteed Installment Agreement
- In the last five years, you haven’t failed to file or pay on time.
- A monthly installment plan would allow you to pay off your debt in 36 months or less.
- In the last five years, you haven’t paid back taxes through an installment agreement.
- You must commit to paying on time in the future
- You haven’t missed filing a tax return
If it isn’t evident, it should be said that IRS installment plans are for people who don’t have serious, debilitating tax debt.
Streamlined installment agreements
A Streamlined Agreement comes with the same terms as the Guaranteed Installment Agreement. However, in a streamlined agreement, the IRS will agree to a payment plan to payoff 25,000 dollars of back taxes or less in 60 months or less.
If your debt is older than five years, and your agreement exceeds that 10-year statute of limitations on IRS debt, then you will be expected to pay back your debt in full– penalties and fees included—in a period that does not exceed the statute of limitations. Essentially, you will be on the hook for a bigger monthly payment so that the IRS collects the grand total of your debt before the statute of limitations can take effect.