IRS installment agreement eligibility: who qualifies and how

Every IRS installment agreement has the same starting conditions:

• All required returns are filed. The IRS generally won't approve a plan with unfiled years. If you're behind, see haven't filed taxes in years.
• You're current on this year's taxes. Employees need enough withholding; self-employed people need to be making estimated payments.
• You're not in an open bankruptcy.
• You can make the monthly payment. For streamlined plans this is roughly the balance divided by the allowed months; for others it's set from your financial statement.

The type of plan you qualify for then depends mainly on how much you owe and whether you're an individual or a business.

• Short-term plan: pay in full within 180 days. Available to individuals owing less than $100,000. No setup fee.
• Guaranteed installment agreement: the IRS must accept it if you owe $10,000 or less in tax (not counting penalties and interest), can pay within three years, and have filed and paid on time for the past five years without a prior agreement.
• Simple Payment Plan (streamlined): individuals owing $50,000 or less in combined tax, penalties and interest can apply online, usually with no financial statement, typically over up to 72 months.
• In-business trust fund express: businesses owing $25,000 or less can often get a plan without a financial statement.
• Non-streamlined plan: larger balances or longer terms. You'll submit Form 433-F or 433-A, and the payment is based on income minus allowable expenses.
• **Partial-payment installment agreement:** for people who can't pay in full before the collection statute ends.

Applying online with direct debit costs $29; online without direct debit costs $69. Applying by phone, mail or in person costs more. Low-income applicants (generally at or below 250% of federal poverty guidelines) can have the fee waived with direct debit or reduced to $43 otherwise. Revising an existing plan online costs $6. Interest at 7% and the failure-to-pay penalty (cut to 0.25% a month for timely filers) continue during any plan.

You can still get a plan, but expect more paperwork. The IRS will usually ask for Form 433-F (Collection Information Statement) or Form 433-A, along with pay stubs, bank statements and bills. It allows living expenses up to its Collection Financial Standards and expects the remaining monthly income toward the balance. It may also expect you to use asset equity — for example, savings or a home equity loan — before approving a long plan, and it will usually file a tax lien.

A common strategy is to pay the balance down to $50,000 or below first, which can make you eligible for the online route without full financial disclosure.

You may be refused or have a plan terminated if you have unfiled returns, aren't making current-year payments, previously defaulted repeatedly, or if the IRS believes you can pay in full now from available assets. Businesses that keep falling behind on payroll deposits are a particular concern, because unpaid trust fund taxes can lead to the trust fund recovery penalty against owners. If your plan has defaulted before, see defaulted installment agreement.

1. Confirm your balance in your IRS Online Account or a transcript.
2. File any missing returns.
3. Estimate an affordable payment with the payment plan calculator.
4. If you owe $50,000 or less, apply through the Online Payment Agreement tool. Otherwise, complete Form 433-F and call the number on your notice, or file Form 9465.
5. Choose direct debit if you can — it lowers the fee and makes default less likely.
6. Keep filing and paying on time for the life of the plan.