Frequently Asked Questions Regarding IRS Installment Agreements
Can the IRS levy my property if I am in an Installment Agreement?
The IRS usually does not levy your bank account, wages, or property if you are in an Installment Agreement.
Can the IRS issue a tax lien if I am in an Installment Agreement?
Yes, the IRS can issue a tax lien while an Installment Agreement is in place. That secures the IRS’s interest against other creditors. Specifically, IRS will generally issue a Notice of Federal Tax Lien if an individual taxpayer owes between $25k-$50k and sets up an IA that is not via payroll deduction or direct debit. Moreover, IRS will generally issue a Notice of Federal Tax Lien if the taxpayer obtains a payment plan for over $50k.
What if I miss an IRS Installment Agreement Payment?
If you miss a payment, you are no longer compliant with the terms of your installment agreement. The IRS may send you Notice CP 523. or Letter 2975 to let you know that they are moving forward with levying your assets or income. In most situations, there are other options. You may be able to restructure your installment agreement, change your payment amount, or pause payments if you are Currently Not Collectible. Typically, the IRS gives taxpayers a chance to make up their missing payments, and the agency generally won't terminate your agreement if you fix the situation within 30 days.
Can You Have Multiple IRS Payment Plans?
An individual or business can only have one payment plan with the IRS. If you get behind on your taxes, a tax pro can help you set up a payment plan with the IRS. Generally, the terms of most IRS payment plans state that you go into default if additional taxes are assessed against you. However, if you reach out to the IRS as soon as you know that you won't be able to pay the taxes, you may be able to get them added to your existing payment plan.
Can I use the IRS’s Online Payment Agreement to set up an Installment Agreement for the current tax year?
Yes. If you have filed your tax return for the year but you don’t have money to pay, you don’t have to wait for a bill to set up a payment plan. If you owe less than $50,000, you can use the IRS’s website to request an online installment agreement. You can also use the website to set up payments if you owe less than $100,000 and can pay it off within 180 days. Alternatively, you may also use Form 9465 (Installment Agreement Request). If you can afford to pay your balance within 180 days, don’t file that form. Instead, call the IRS at 1-800-829-1040.
What are some payment methods the IRS accepts?
- Direct debit from your bank account (IRS prefers)
- Payroll debits from your work paycheck (IRS prefers)
- Money orders or personal checks
- Electronic Federal Tax Payment System (EFTPS)
- Credit cards
What is the interest rate on IRS installment agreements?
While an installment agreement helps prevent liens and levies, the IRS still continues charging interest on the balance due. The rates the IRS charges are different for individuals and corporations. Interest rates are updated quarterly. The rate that is charged for individuals and corporations with small underpayments is the short-term rate plus 3 percentage points. So as of 2024, this rate is 8% per year.
What is the deadline to appeal an Installment Agreement rejection?
Normally you have 30 days (postmarked) from the date of your rejection to submit a new Installment Agreement request.
Why would you want to appeal a defaulted installment agreement?
If you missed a payment, accumulated a new balance, or failed to file a tax return, the IRS will consider your installment agreement as in default.
What is the deadline to appeal an Installment Agreement termination?
If your installment agreement is terminated, you have 30 days to appeal. Therefore, if you don’t appeal the termination, your agreement will end on the 46th day after the letter was sent. At that point, you have 30 days to request reinstatement. There is a $89 reinstatement fee.
Will the IRS levy my property If my Installment Agreement is rejected?
If your Installment Agreement is rejected, the IRS may levy your property. You have 30 days to appeal the rejection. If you appeal, the IRS cannot levy your property or garnish your wages until the appeal is accepted or rejected.
Can I appeal an appeal?
Generally, the CAP or Collection Appeals Program is used when an installment agreement has been terminated or rejected. In fact, Form 9423, is normally used to appeal a terminated or rejected installment agreement. However, once the appeals process is over, the decision is binding. Therefore, you cannot request a judicial review of the appeal. That is why you should seek professional help during the appeals process.
Why would the IRS terminate my existing payment plan?
- You failed to file subsequent returns.
- Form 433 (Collection Information Statement) was inaccurate
- Your total tax liability since you began your IA has increased
- You missed a payment
Why Would the IRS Reject My New IA Request?
- Collection Information was inaccurate or incomplete
- You previously defaulted on an IA
- You failed to file current tax returns
- Your necessary living expenses on Form 433 are unreasonable
Can I obtain an installment agreement if I owe over $50,000?
Yes, you can. To find out which installment agreement details by tax amount owed, see this page.
Disclaimer: The content on this website is for educational purposes only and does not serve as legal or tax advice. For specific advice regarding your tax situation, contact a licensed tax professional or tax attorney.