7.2.1 General Principles
7.2.1 General Principles aetrahan Thu, 02/02/2023 - 09:28A taxpayer who is not financially able to pay a tax debt immediately may make monthly payments through an installment agreement. The IRS generally will not take collection actions while an installment agreement is being considered, in effect, or on appeal.
The minimum monthly payment on an installment agreement is $25. The time period for installment agreements varies. Generally, the installment agreement should not extend beyond the time remaining on the collection statute of limitation. Low-income taxpayers who pay a small monthly payment may not be reducing their principal tax debt given the interest rates charged on the taxes owed. The fees for setting up installment agreements also vary. Most low-income taxpayers will qualify for a reduced $43 set-up fee; apply for this reduced fee using Form 13844.
Taxpayers who owe less than $50,000 may apply for a guaranteed or streamlined installment agreement by several methods: (1) apply online (2) call the phone number on the IRS notice or bill or (3) complete and mail a Form 9465, Installment Agreement Request. A taxpayer who owes more than $50,000 will have provide additional financial information on a Form 433-F.
A taxpayer who can pay the full amount owed within 120 days may want to apply for a 120-day suspension of collection activity to provide time to gather the funds.1 In cases of financial hardship, a longer suspension of collection activity may be possible.2 This procedure allows the taxpayer to avoid the fees for setting up an installment agreement.