If you owe the IRS a substantial amount of money in back taxes, you may have considered entering into an IRS installment agreement to pay off your debt. This payment plan allows you to pay your outstanding balance in monthly installments, rather than in one lump sum. But how long can you do an IRS installment agreement?
The length of your IRS installment agreement depends on several factors. The amount of your tax debt, your ability to pay, and the type of installment agreement you choose all play a role in determining the length of your agreement.
The IRS offers three types of installment agreements:
1. Guaranteed Installment agreement
2. Streamlined Installment agreement
3. Non-Streamlined Installment agreement
Guaranteed Installment Agreement
A guaranteed installment agreement is available to taxpayers who owe less than $10,000 in back taxes. This type of agreement is the easiest to obtain and typically lasts for up to three years. However, the required minimum monthly payment is the total amount of the tax liability divided by 36.
Streamlined Installment Agreement
A streamlined installment agreement is for taxpayers who owe between $10,000 and $50,000 in back taxes. This type of agreement allows taxpayers to repay their debt over a period of up to six years. The required minimum monthly payment is the total amount of the tax liability divided by 72.
Non-Streamlined Installment Agreement
If you owe more than $50,000 in back taxes, you will need to apply for a non-streamlined installment agreement. This type of agreement can last for up to ten years, but the required monthly payment is slightly more complicated. The IRS will require a detailed financial analysis of your income and expenses to determine your disposable income and the monthly payment amount.
It`s important to note that the length of your installment agreement is not set in stone. If your financial situation changes, you may be able to renegotiate the terms of your agreement. However, if you default on your payments, the IRS can terminate the agreement, and you will owe the full amount of your back taxes plus interest and penalties.
In conclusion, the length of your IRS installment agreement depends on the type of agreement you choose and the amount you owe the IRS. If you are considering entering into an installment agreement, it`s important to understand the terms and how they apply to your specific situation. Speak with an experienced tax professional to determine the best option for you and how long your agreement term is likely to be.