Can You Have Two Installment Agreements With the IRS?

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Consolidating Tax Balances

Take one of these steps before the due date for the tax year in question to avoid collections actions that will place your existing installment agreement in default.

The easiest way to amend your installment agreement is with the IRS online payment agreement tool. You can revise the type of plan, monthly payment due date, and payment amount. You might be asked to revise a proposed payment amount that is too low.

If you find that you are unable to make the minimum monthly payment when you add your new back taxes to the existing debt, you must file Form 433-F Collection Information Statement. This can qualify you for an offer in compromise, in which you settle your back taxes for less than you owe, particularly if you are unable to make a higher payment while still meeting your reasonable monthly living expenses.

Can You Have Two Installment Agreements With the IRS?

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To change an existing plan, you will be charged an $89 fee whether you apply in person, through the mail, by phone, or online at the IRS website. Low-income taxpayers can apply for waived or reduced fees depending on the circumstances.

Types of Installment Agreements

Guaranteed Installment Agreement

Streamlined Installment Agreement

With a streamlined agreement, you can qualify for an automatic payment plan without providing additional financial information. This program, sometimes called the Fresh Start program, is available for taxpayers who owe less than $50,000 and can pay their balance in full within 72 months. You must make a minimum monthly payment of $25 or the total balance with penalties and interest divided by 50, whichever amount is greater.

Although the streamlined agreement carries a setup fee depending on your monthly payment method, it does not result in a federal tax lien. For a Direct Debit Installment Agreement, in which the monthly payment is deducted from your checking account, the fee is $31 if you apply online or $107 if you apply in person, by phone, or by mail. Taxpayers whose household income is at or below 250% of the federal poverty threshold can apply to have these fees reduced or waived.

Partial Payment Installment Agreement

If you can’t afford to pay your entire balance in 72 months, you can arrange for a partial payment agreement. To qualify, you must complete Form 433-F, which requires information about your assets, monthly income, and monthly expenses. The IRS will review this information and might require you to sell assets to pay back some of the debt.

Those who are approved for this type of agreement must undergo a financial review every two years. If your financial situation changes, your agreement could be changed or terminated.

Non-Streamlined Installment Agreement

Taxpayers who owe more than $50,000 can negotiate an installment plan but must submit Form 433-F. The financial information included in this document will be used to accept or reject your proposal. You must also indicate a desired monthly payment amount. With this type of agreement, you will receive a decision within several months. If your proposal or payment amount is refused, you have the right to appeal. Refusal can occur if you provided false or incomplete information, if you have demonstrated living expenses the IRS considers frivolous, or if you defaulted on an IRS installment agreement in the past.

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Last Updated: December 9, 2021 Solvable is a Trusted Source For

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