Guaranteed Installment Agreement: When & How To Request

If you have taxes owed, a Guaranteed Installment Agreement is the easiest installment plan to get. In fact, as long as you meet the basic requirements, it’s guaranteed by law.

To qualify, you must be an individual with $10,000 or less in assessed tax, and you must be able to pay off the balance within three years or by the Collection Statute Expiration Date (CSED) if that's sooner. To help you decide if this is the best option for you, the following sections outline the requirements, how to apply, and the differences between this type of payment plan and other IRS installment agreements.

Requirements for Guaranteed Installment Agreements (GIA)

To qualify for a Guaranteed Installment Agreement, you must meet the following criteria:

1. You owe $10,000 or less (excluding interest and penalties).
2. Your spouse and you (if filing jointly) have filed all your tax returns from the last five years. 
3. You are not currently on a payment plan for late taxes. You have not set up a payment plan in the last five years.
4. Agree to pay the balance within three years or by the CSED if sooner.
5. You are not in bankruptcy.
6. You did not have an installment agreement in the previous five taxable years

Note that although the rule says that you must have filed the last five years of returns, you can get approved if you have filed the last four years and an extension for the current year. If the IRS accepts your request, you must make all the payments on time, or the agreement may terminate. Additionally, the agreement can also be terminated if you file future tax returns late or fail to pay, but in some cases, you may be allowed to add a new tax liability to your existing payment plan.

 

How To Request A Guaranteed Installment Agreement

There are a few different ways to request a guaranteed installment agreement. For most people, the easiest and most affordable option is to apply online. 

1. Online - You can apply for a guaranteed installment plan online with the IRS’s Online Payment Agreement (OPA).
2. Mail - To apply by mail, print out Form 9465 (Installment Agreement Request) and fill it out. Then, mail the application to the address on the form. If you don’t have a printer, you can call 1-800-829-1040 and ask the IRS to mail you Form 9465, or you can have it printed at your local library.
3. Attached to tax return - If desired, you can attach Form 9465 to your tax return to request a payment plan on taxes shown due on that return. You can also submit this form with your return when you e-file using most tax software, or you can request your tax pro to file it for you.
4. Phone - Alternatively, you can call the IRS. You may want to fill out Form 9465 before you call. Then, you can rest assured that you have all the details you need.

Tips and Requirements for Your Guaranteed Installment Agreement

Here are some tips and requirements so that you know what to expect during the application process. 

1. Monthly payment - When applying, note how much you can pay each month. Make sure the payment you suggest is enough to pay off the balance, interest, and penalties within 36 months. If you aren’t sure what payment to suggest, divide your balance by 30. That gives you a cushion to cover the interest and penalties, while also ensuring you pay your balance off quickly.
2. Payment date - You also have to choose a date for your payment (between the 1st and the 28th) Make sure that date works with your budget. 
3. Set up fee - You must submit a set-up fee with your first payment. At the time of writing, the setup fee is $22 for direct debit agreements set up online and $107 for all other OPA agreements. If you don’t use the online tool, these fees rise to $69 and $178 respectively. If your income is under a certain amount, you may only have to pay a $43 fee, and in some cases, low-income applicants can have their fees waived.

If you want to make changes to your installment agreement, you can do so through the online system. The IRS lets you change your monthly payment, due date, and bank account details online. However, if you're no longer able to pay the minimum monthly payment, need longer to pay, or want to add a new tax balance, you may need to call the IRS or file a collection information statement. 

What to Expect While You're on a Guaranteed Installment Agreement

While you are on this type of payment plan, you can expect the following:

• No tax lien - The IRS doesn't file tax liens with this type of payment agreement. 
• No collection actions - When you set up an installment agreement, the IRS will not garnish your wages, go after your assets, or pursue any other collection actions.
• Notices - You may still receive annual notices about your tax debt due. 
• Interest - The IRS will assess interest on your balance owed for the duration of your payment plan.
• Penalties - The IRS will add a failure-to-pay penalty of 0.25% per month. This penalty will not apply once it reaches 25% of your original tax debt.

Alternatives to Guaranteed Installment Agreements

If you don't qualify for this type of payment plan, you should look into the IRS's other options. Here are links to other types of installment agreements that you may want to consider, and they are organized based on the reasons you may have not qualified for a guaranteed plan:

• Owe over $10,000 - If you owe over $10,000 but less than $50,000, you may qualify to set up a streamlined installment agreement. This option doesn't require any financial details if you have a history of compliance and can pay off the debt within six years or by the collection expiration date if sooner. 
• Need more than three years to pay - If you can pay off the debt within six years, you may also qualify for a streamlined agreement. If you need more time, however, you should look into a non-streamlined agreement. You can also explore the non-streamlined option if you owe over $50,000, regardless of how quickly you can pay. 
• Have a history of incompliance - If you have defaulted on installment agreements in the past, the IRS will not give you a guaranteed installment agreement. Instead, you will need to provide financial verification, and then, depending on your financial details, the IRS may approve you for an installment agreement. 

A guaranteed installment agreement is the easiest option, but it doesn't work for everyone. If you're unsure of what to do, consider talking with a tax pro. They will help you apply for a payment plan or look into other relief options based on your situation. 

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.