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Resolution Options

Installment Agreement

IRS Installment Agreement

An installment agreement is a formal payment plan allowing a taxpayer to pay a tax debt in monthly installments over time. Once approved, active levy and garnishment action typically stops.

Authority:IRC § 6159, IRM 5.14.1. Installment agreements toll the collection statute — this extends the IRS's ability to collect by the length of the agreement.

Three Tiers of Installment Agreements

Guaranteed Installment Agreement

≤$10,000

Available if you owe $10,000 or less, have filed all required returns, and have not had an installment agreement in the prior 5 years. The IRS cannot refuse a guaranteed agreement if you meet these criteria.

  • • Maximum term: 36 months
  • • No financial disclosure required
  • • Must pay full balance within the term

Streamlined Installment Agreement

≤$50,000

For balances up to $50,000. Approved without full financial review — no Collection Information Statement required. This is the most common type for individual taxpayers.

  • • Maximum term: 72 months
  • • No financial disclosure required
  • • Avoids federal tax lien filing (Fresh Start provision)

Non-Streamlined Installment Agreement

>$50,000

For balances over $50,000 or when streamlined terms cannot be met. Requires Form 433-A (Collection Information Statement) with full financial disclosure. The IRS reviews your income, expenses, and assets.

  • • Maximum term: 84 months
  • • Full financial disclosure required
  • • IRS may file Notice of Federal Tax Lien

What an Agreement Costs

An installment agreement does not stop interest and penalties from accruing. The balance continues to grow while you're on the plan:

Interest Rate (2026)

6-7%

Federal short-term rate + 3%. Compounds daily. Q1: 7%, Q2: 6%.

Failure-to-Pay Penalty

0.25%

Per month while on an approved plan (reduced from 0.5%)

Setup Fee

$31–$225

Varies by setup method and income level

Critical Tradeoff: Statute Extension

Entering an installment agreement tolls (suspends) the Collection Statute Expiration Date (CSED) for the duration of the agreement plus 30 days if the request is rejected. This extends the IRS's legal ability to collect.

Example: You have a tax debt from 2016 with a CSED of 2026. If you sign a 5-year installment agreement, the CSED is extended until 2031. You gave the IRS 5 additional years to collect.

Installment Agreement

  • + Stops active collection immediately
  • + Structured monthly payments
  • — Extends collection statute by agreement length
  • — Interest and penalties continue

Currently Not Collectible

  • + Stops active collection immediately
  • + Does NOT extend collection statute
  • + No monthly payments required
  • — Must prove financial hardship

Federal Tax Lien Thresholds

The Fresh Start Initiative changed how liens are handled with installment agreements:

  • $50,000 threshold: Streamlined IA avoids lien filing in the first place
  • $25,000 withdrawal threshold: Lien can be withdrawn with Direct Debit IA after 3 consecutive payments for balances ≤$25,000
  • $25,000-$50,000: Streamlined IA prevents new lien, but withdrawal requires paying down to $25,000

What to Do Now

  1. 1

    Check your CSED first: Know when your debt expires before deciding. If the debt is close to expiring, an installment agreement may extend collection longer than necessary.

  2. 2

    Determine which tier applies: Balances under $10,000 (guaranteed), under $50,000 (streamlined), or over $50,000 (non-streamlined) have different requirements.

  3. 3

    Compare alternatives: If your disposable income is very low, CNC may be better (no statute extension). If you cannot pay the full balance, OIC may settle for less.

  4. 4

    Request a collection hold: If active collection is happening, request a hold immediately while you evaluate which resolution option is right for your situation.

Need Immediate Help?

Our tax professionals can contact the IRS today and request a hold on collections while we review your situation.

Request a Hold Now

No obligation. We will review your case and contact you.

Call (310) 598-3759

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