IRS Streamlined Installment Agreement

Streamlined Installment Agreements allow you to set up a monthly payment plan on your tax debt, without providing the IRS with any details about your financial situation. To qualify, you must owe $50,000 or less ($25,000 or less for businesses), and you must be able to pay off the balance within six years (two years for businesses).

The rest of this post outlines additional requirements, how to apply, and other types of installment agreements for taxpayers who don't qualify for this option.

Key takeaways about streamlined installment agreements

• What? An IRS tax debt repayment plan that you can set up without providing financial details.
• Who? Individuals who owe $50,000 or less and businesses that owe $25,000 or less. 
• How? Set up online or by filing Form 9465.
• Why? To help taxpayers resolve their tax debt more easily.
• Additional requirements? You must be up to date on filing your tax returns and making estimated payments.

What Is an IRS Streamlined Installment Agreement?

The IRS calls these installment agreements “streamlined” because they don’t require verification of your assets, expenses, liabilities, or income. In other words, no Collection Information Statement is required in most cases as long as you can pay off the balance within 72 months or by the CSED if that comes sooner. If you owe $50,000 or less or if your business owes $25,000 or less, you may qualify for a Streamlined Installment Agreement (SIA).

You can set up a streamlined installment agreement on income taxes, civil penalties, payroll taxes for your business, and other assessments such as the Trust Fund Recovery Penalty. Note that if your business is still in operation, you can only get a streamlined agreement on up to $25,000 in income tax, and you generally must pay off the balance within 24 months.

Alternative Options

The IRS offers several other types of installment agreements, and you may want to look into those options in the following situations. Check out the links to learn more about the application process and requirements for each of these IRS installment agreements:

• Owe less than $10,000 and can pay it off within 36 months - Consider applying for a guaranteed installment agreement. Acceptance is guaranteed as long as you're up to date on your filing and payment requirements, and you haven't had an installment agreement in the last five years.
• Owe more than $50,000 - Consider looking into the non-streamlined installment agreement. Unfortunately, you cannot apply online. You must contact the IRS directly. Depending on the situation and how much you owe, you may be required to file a collection information statement, but for the last few years, the IRS often doesn't require this if you owe less than $250,000.
• Need more than six years to pay - If you cannot pay off the balance within six years, you may be able to get up to the collection expiration date, but to qualify, you will need to provide financial verification. The IRS often refers to this as financially verified installment agreements.

If you cannot make the minimum monthly payment on an installment agreement, consider an Offer In Compromise or a Partial Payment Installment Agreement. Alternatively, try to prove financial hardship to the IRS to get your account marked as currently not collectible. You must have limited assets and very little disposable income to qualify for any of these three options, but if you do qualify, you may be able to avoid paying anything or pay less than you owe.

Requirements for a Streamlined Installment Agreement

Streamlined installment agreement requirements for individual taxpayers include the following:

1. $50,000 or less is owed, not including interest and penalties for individuals.
2. Monthly payments will pay off the balance within 72 months or before the CSED(s) expires if sooner.  
3. You have filed at least the last five years of tax returns. Note that if the IRS has issued a substitute for return, that covers your filing requirement.
4. Your spouse and you (if married filing jointly) have not entered any installment agreements over the last five years.
5. You are not filing for bankruptcy.
6. You are willing to pay a fee to set up a Streamlined Installment Agreement. There is a $22 fee if you set up a direct debit from your bank account using the Online Payment Agreement. It is $107 if you set up an agreement with the OPA but pay by check or money order. However, the former fees jump to $69 and $178, respectively, if you do not apply online and instead use the mail or phone. There is an $89 fee to reinstate the payment plan or restructure an installment agreement. If you use the OPA, that fee is $10.

How to File or Request a Streamlined IRS Installment Agreement

Here are the steps you should take to apply for a streamlined installment agreement.

1. Make sure you are up to date on filing your returns - Contact the IRS to make sure you don’t have any missing tax returns. If you do, make sure to file the tax returns first and get into compliance. See our unfiled tax returns page to get started. You can also sign into your IRS online account to check your filing history.
2. Check the debt expiration date - Tax debt expires about 10 years after assessment. Normally, you have six years on a streamlined agreement, but if the collection expiration date is before then, you will need to pay off the debt sooner. You can check the expiration date online or by calling the IRS.
3. Apply online or fill out Form 9465 - If you are a business that owes $25k or less, or an individual who owes $50k or less, you can use the IRS Online Payment Agreement (OPA), call the IRS, or mail in form 9465. 
4. Decide on your monthly payment - When applying, you need to ensure your monthly payment satisfies the taxes within six years or by the CSED if sooner. You can estimate your payment by dividing the total amount you owe by 72 (or # of months left on CSED). To ensure you pay off the interest and penalties, you may want to divide your balance due by a slightly lower number to give yourself a cushion. Remember, the faster you pay off the taxes, the more you save in interest and penalties.
5. Choose a payment date - It must be between the 1st and the 28th, but pick a day that works with your budget. Paying late can terminate the agreement.
6. Select your payment method - Tax debts between $25,000 to 50,000 require direct debit or a payroll deduction if you want to avoid a tax lien. If you owe over $25,000 and don't want to set up direct debit, you will need to provide financial details to the IRS. If you owe less than $25,000, you can mail in your payments or sign in to pay manually online every month.

If you run into issues or prefer a better outcome, contact a licensed tax professional to help you with the forms and the process. Remember, mistakes can lead to more interest and penalties. Generally, the IRS provides a decision within 30 days. To be on the safe side, make the payments until you get a response. Also, feel free to contact the IRS directly. Calling the IRS can speed up the setup process, but unfortunately, sometimes, hold times are long.

How to Modify Your Existing Installment Agreement

Once you set up your streamlined payment plan, you can make certain changes online. Allowed modifications include payment date, payment amount, and bank details. If your changes put you outside of the parameters of a streamlined agreement (aka if you add a new tax liability that brings the balance over $50,000 or you cannot afford to pay off the debt by the end of the term), you will need to file a collection information statement and call the IRS.

FAQs About Streamlined Agreements

Is the streamlined agreement part of the Fresh Start Program?

In 2011, the IRS’s Fresh Start Initiative changed the eligibility levels for the Streamlined Installment Agreement. Before the change, businesses needed to have less than $10,000 in taxes, and individuals were required to have less than $25,000. Now, however, individuals can qualify with up to $50,000 in total tax debt including interest and penalties (with exceptions), and businesses can be eligible with an income tax balance of up to $25,000. 

Does the IRS file tax liens when you set up a streamlined agreement?

With recent IRS expanded criteria, a tax lien is generally only placed if the tax balance is $50,000 or more, or if the balance is between $25,000 and $50,000 and the taxpayer refuses to use direct debit or payroll deduction as a payment method. However, if you have a history of default, the IRS may make a lien determination even if you meet these conditions. 

Will the IRS remove an existing tax lien if I set up a streamlined installment agreement?

If the IRS has already issued a tax lien against you, you may be able to get it withdrawn. Individuals who owe $50,000 or less and set up a direct debit SIA or payroll deduction SIA, can have tax liens withdrawn. Before the IRS removes a tax lien, the taxpayer must make three consecutive monthly payments.

How long can you make payments on a streamlined installment agreement?

Usually, with balances under $50k, individuals can obtain up to 72-month terms. However, if the collection statute expiration date is within the next six years, you can only take that long to pay. The shorter deadline applies. Generally, active businesses with balances of $25,000 or less can obtain 24-month SIAs. Similarly, non-operating companies can qualify for streamlined trust-fund (payroll tax) repayment plans, as long as they pay off the balance within 24 months or by the CSED (whichever comes first).

What if I need more than six years to pay?

If you need more than six years to pay off your tax debt, you may need to apply for a financially verified installment agreement. As long as you prove that you're paying the most you can afford, the IRS may be willing to give you until the collection statute expiration date, which may be up to 10 years if you're applying for payments on a new tax debt.

In late 2016, the IRS began testing new criteria for individuals with more than $50k in tax debt. Specifically, the IRS allowed individuals with balances between $50,000 to $100,000 to set up 84-month SIA terms as long as the tax was paid before the CSEDs and the payment method was direct debit or payroll deduction. However, the IRS did not extend this program. Instead, the agency replaced it with a non-streamlined installment agreement.

What is a non-sreamlined installment agreement?

A non-streamlined agreement allows taxpayers to have balances up to $250,000. As long as your account hasn't been assigned to a revenue officer, these plans do not require financial disclosure or automatic direct debit payments, but they generally include a lien determination. Moreover, the balance due only needs to be paid before the CSED. That means that you could have up to 120 months to pay certain balances.

However, if a revenue agent has been assigned to your account, they may require a financial disclosure (collection information statement). Additionally, to set up a non-streamlined installment agreement on over $250,000, you will need to provide a collection information statement. 

Important Considerations

Contact the IRS or a tax professional if, at any point, you cannot make monthly payments anymore. Missed payments could lead to a termination of your agreement. Generally, if you miss one or even two payments, the IRS won't terminate your agreement. The agency will try to work with you, but if you continue to miss payments, the plan will go into default. If the IRS terminates your agreement, it can start the asset seizure process.

Most importantly, if you do not qualify for a streamlined installment agreement, you may be eligible for a non-streamlined agreement or a verified financial installment agreement that requires you to disclose your financial information to the IRS. Consider talking with a tax professional to find the best option for 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.