If you request an installment agreement, the time the request is pending pushes out, or suspends the running of, the initial ten-year CSED. Generally, an installment agreement request is pending until it is reviewed; and is established, or the request is withdrawn by you or rejected by the IRS.  If the request for an installment agreement is rejected, the running of the collection period is suspended for an additional 30 days. Similarly, if you default on your installment agreement payments and the IRS proposes to terminate the installment agreement, the running of the collection period is suspended for an additional 30 days. Finally, if you exercise your right to appeal either an installment agreement rejection or termination, the running of the collection period is suspended from the time the appeal is pending to the date the appealed decision becomes final.

With an approved PPIA, you agree to stay current with all monthly payments, and all tax filing and payment requirements. If you default by missing a payment(s), the installment agreement may be terminated, and the IRS may begin taking enforcement action. It’s important to select the agreement that meets your personal situation and allows you to make your payments every month and on time.  A common source of tax debt is not having enough money withheld from your pay. If this is happening to you, consider revising your IRS Form W-4, Employee’s Withholding Allowance Certificate, to avoid this problem in future years. If you’re self-employed, make your estimated payments throughout the year.

You have a balance on your tax account and you want to pay the balance in monthly payments to the IRS, but you do not qualify for a regular payment plan and have been set up on a PPIA, or you have requested a PPIA.

You may wish to consider other resources before setting up a payment plan. Can you borrow from a financial institution or a family member to pay the balance? If so, it will probably cost you less money since the IRS charges you interest even though you’re on a payment plan. You may also avoid some penalties and associated interest by paying the IRS sooner.  Compare the costs for your situation.

Review the tax debt to be sure you owe it. If you don’t believe you owe the tax, now is the time to talk to the IRS about it.  If you’ve received an IRS notice, start by calling the number on the notice to discuss the amount you owe. The IRS will not consider an installment agreement if you have outstanding tax returns, so you must have filed all your tax returns.

You can apply for a PPIA by phone or by mail, but not online.

If you’re in this situation, you might also want to consider submitting an offer in compromise to settle your taxes instead of an installment agreement.

Even if the IRS approves an installment agreement, applicable penalties and interest will continue to accrue on your account for the duration of the IA. For individuals, balances over $25,000 must be paid by Direct Debit.  For businesses, balances over $10,000 must be paid by Direct Debit. One of the conditions of an installment agreement is that the IRS will automatically apply any refund (or overpayment) due to you against taxes you owe. The IRS may also file a Notice of Federal Tax Lien.  For more information, see Publication 594, The IRS Collection Process.

After requesting a payment plan, you may receive notices or letters such as:

• Rejection of proposed PPIA
• Confirmation of an accepted PPIA
• Monthly reminders for payment

If you are approved for a PPIA and then incur additional balances, fail to make required payments, or fail to file current tax returns, you may receive notices or letter such as:

• Default of current PPIA
• Termination of current PPIA

The IRS will ask you for updated financial information at least every two years. It is important that you timely respond to requests for updated financial information to avoid defaulting your agreement.  Financial information includes supporting documents for your income, expenses, and other amounts you owe (e.g., home and car loan payments, other obligations). The IRS publishes national and local standards you can use to determine your allowable monthly expenses and calculate the appropriate monthly payment.  If you feel you should be allowed more than the standard amount, provide reasoning with your application or during the routine reviews of your financial information over the course of your agreement.

By mail

You can complete the IRS Form 9465, Installment Agreement Request, submit it with all the required documents, and mail it to the address in the instructions. There is not an option to select a PPIA on the form, so you will want to include a note explaining that you would like to be considered for a PPIA.

For PPIA, you also need to submit another form:

• Individuals:  Form 433-F, Collection Information Statement
• Business: Form 433-B, Collection Information Statement for Businesses

By phone

If you prefer to apply by phone, call 800-829-1040 (individual) or 800-829-4933 (business), or the phone number on your bill or notice.

Fees:

Depending on the type of agreement, and the amount of your income, you may be charged a fee to establish an installment agreement.  The initial fee for setting up an installment agreement varies depending on the payment method you choose. These fees are subject to change and are listed on the Online Installment Agreement page.

Fees may be reduced or waived if you are determined to be low income. Waiver or reimbursement of the user fees only applies to individual taxpayers with adjusted gross income, as determined for the most recent year for which such information is available, at or below 250% of the applicable federal poverty level (low income taxpayers) who enter into long-term payment plans (installment agreements) on or after April 10, 2018. If you believe that you meet the requirements for low income taxpayer status, but the IRS does not identify you as a low income taxpayer, please review Form 13844, Application for Reduced User Fee for Installment Agreements for guidance. Applicants should submit the form within 30 days from the date of their installment agreement acceptance letter to request the IRS reconsider their status. Applications should be mailed to:

Internal Revenue Service
PO Box 219236, Stop 5050
Kansas City, MO 64121-9236

Low income taxpayers may be able to have the fee waived at the time of entering into the IA if they choose to pay by Direct Debit, or if not, they may be able to get the fee reimbursed once they meet the terms of the agreement.

What if the IRS rejects my request, defaults, or terminates my installment agreement?

You have the right to appeal:

• Termination, or proposed termination of an installment agreement
• Rejection of an installment agreement
• Modification, or proposed modification, of an installment agreement

See Collection Appeal Program (CAP) for more information.

If it’s from the IRS, the notice will have instructions on how to respond. If you want more details about your tax account, you can order a transcript. Also, review your notice or letter to see if there is a specific website link to visit for additional information. This is usually located at the end of the notice or letter.

Review the tax debt to be sure you owe it. If you don’t believe you owe the tax, now is the time to talk to the IRS about it. If you’ve received an IRS notice, start by calling the number on the notice to discuss the amount you owe.

• File all required tax returns (even if you can’t pay); and
• Review your bills to figure out how much you can afford to pay the IRS each month.

The IRS will only agree to an installment agreement if you’ve filed all your returns. Once you’ve entered into an agreement, you’ll have to pay all future taxes on-time or your agreement may default.

You may wish to consider other resources before setting up an installment agreement. Can you borrow from a financial institution or a family member to pay the balance? If so, it will probably cost you less money since the IRS charges you interest even though you’re on a payment plan. You may also avoid some penalties and associated interest, by paying the IRS sooner. Compare the costs for your situation.