Did you know that you can enter into an installment agreement with the IRS without having to provide any of your financial information or any supporting documents? It’s true! And I can show you how.
The focus of my practice in Severn, MD is to help taxpayers get in compliance with their IRS and state tax filings and to represent them before the IRS and the states with their tax collection issues.
There are different types of installment agreements offered by the IRS:
- Partial Pay
An automatic installment agreement is available when the taxpayer owes less than $10,000 in tax and meets a couple of criteria:
- During the past five years the taxpayer has not owed any tax or had an installment agreement.
- The taxpayer agrees to pay the full amount owed within three years.
A streamlined installment agreement is similar to an automatic. The same criteria must be met but the numbers increase to $50,000 or less being owed and paying it back over 72 months. With both the automatic and streamlined installment agreements, there’s no requirement to provide any financial information to the IRS. If you meet the criteria, you can either make a phone call to the IRS to set it up or you can do so online through the IRS website.
When a taxpayer owes more than $50,000 or is unable to repay the amount back within 72 months, a regular or a partial-pay installment agreement is available but completing an IRS Form 433 – Collection Information Statement will be required. The Form 433 is used to report your gross monthly household income, your allowable expenses (which may be very different from your actual expense), any assets that you own and any liabilities that you owe. Statements from the taxpayer to back up the amounts reported on the Form 433 will also need to be provided. Needless to say, this is not an easy form to complete.
The IRS will review your financial information and will set up an installment agreement based on your monthly available cash as shown on the Form 433. If this monthly amount results in the IRS debt being repaid within the time remaining on the 10-year collection statute of limitations, then the agreement will be a regular installment agreement. If the taxpayer doesn’t show the ability to pay the balance due in full over the time remaining on the statute, a partial-pay installment agreement will be allowed. One major difference with the partial-pay installment agreement is that the IRS will revisit the taxpayer’s ability to pay, usually every two years, just to see whether the taxpayer can afford to increase their monthly payment.
If you owe more than $10,000, the easiest installment agreement by far is the streamlined. There’s no requirement for you to fill out a Form 433, to submit financials or to be reviewed, and you can set it up online or by calling the IRS.
In a pilot program that started in 2017, the IRS expanded the streamlined installment agreement from $50,000 to $100,000 and extended the payment terms from 72 months to 84 months (or the time remaining on the collection statute, whichever is less). The program was so successful that the IRS extended the pilot program through September 2018. The big news with streamlined installment agreements as of October 2018 is that the increase was made permanent! This makes things easier for everyone involved: you don’t have to turn over your financial information, and the IRS doesn’t have to review it.
If you’d like to see all the details, check out the updated Internal Revenue Manual:
My goal is to help taxpayers meet their tax filing obligations, to pay the least amount of tax legally possible, and to represent them when they have an IRS or state collection issue. I have clients not only in Severn, MD and Anne Arundel County, MD but all over the world since technology has made our world much smaller and our ability to work remotely much easier. Come see me or just give me a call if you’re a candidate for an IRS streamlined installment agreement or if you need help in getting compliant with your IRS and state tax filings. You can reach me at:
Lisa D Church, CPA, EA, NTPI Fellow, MBA
7865 Clark Station Rd
Severn, MD 21144