What types of IRS installment agreements are available?
The IRS offers several types: (1) Guaranteed Installment Agreement — for debts under $10,000, you automatically qualify if you haven't defaulted in 5 years and can pay within 36 months; (2) Streamlined Installment Agreement — for debts under $50,000 ($100,000 for businesses), can be arranged online without a Collection Information Statement, up to 72 months; (3) Non-Streamlined — for debts over $50,000, requires Form 433-F (financial disclosure) and IRS review; (4) Partial Payment Installment Agreement — you pay less than full amount, IRS reviews your finances every 2 years.
Does an IRS payment plan stop collections?
Yes. Once an installment agreement is in effect, the IRS will not levy your wages, bank accounts, or property as long as you remain current on the agreement payments and continue to file and pay all future tax returns on time. However, a federal tax lien may still be filed against your property, which can affect your credit and ability to sell assets or refinance. The lien is released within 30 days of paying the full balance. You can request a lien withdrawal after you have paid by direct debit under a streamlined agreement.
What is an IRS Offer in Compromise?
An Offer in Compromise (OIC) allows you to settle your tax debt for less than the full amount owed if paying the full amount would create economic hardship. The IRS considers your ability to pay, income, expenses, and asset equity. The IRS accepts approximately 40% of OIC applications. To pre-qualify, use the IRS OIC Pre-Qualifier Tool. Required forms: Form 656 (Offer in Compromise) and Form 433-A (Collection Information Statement). A non-refundable $205 application fee applies. Tax attorneys and enrolled agents can significantly improve your OIC success.