Options
Payment Plan
An installment agreement is a formal contract with the IRS to pay your tax debt in monthly installments. The moment an agreement is in place, levy and garnishment action stops. No more frozen accounts. No more paycheck seizures.
Before you sign: installment agreements extend the IRS collection statute by the full length of the plan — sometimes 5 or 6 years. This is a major tradeoff most people never consider.
Situation 1 — Bank levy received: The IRS froze your checking account. You have 21 days before the funds are seized. Setting up an installment agreement before that deadline releases the levy and gives you a structured way to pay. Most agreements approved same-day for balances under $25,000.
Situation 2 — Wage garnishment active: Your employer received a notice to withhold 25% of your paycheck. A payment plan stops this within 1 to 3 business days of IRS confirmation. Your next paycheck should be whole again.
Situation 3 — Can't pay full but CAN pay something: You owe $18,000 and cannot pay it in full, but you have steady income and can afford $300/month. A payment plan stops collection action and keeps you compliant. Interest and penalties continue accruing on the balance, but collection stops.
Available if you owe $10,000 or less (not counting interest and penalties) and have filed all required returns for the past 5 years. The IRS cannot refuse a guaranteed agreement if you meet the criteria. Payments must be enough to pay the debt within 3 years.
Best for: Small balances with reliable income
For balances up to $25,000. Approved without a financial review — no Collection Information Statement required. You choose a monthly amount; the IRS sets a 72-month maximum. This is the most common type and is typically approved same-day online or by phone.
Best for: Most people with balances under $25,000 who can pay the debt off in 6 years
For businesses with payroll tax debt up to $25,000. Must be paid off within 24 months. Prevents federal tax lien from being filed.
Best for: Business owners with current payroll tax liabilities
For balances over $25,000. Requires Form 433-A (Collection Information Statement for Individuals). The IRS reviews your income, expenses, assets, and proposes a payment amount based on what they determine you can afford — which may be higher than you expect.
Best for: Higher balances where you need to negotiate based on documented finances
An installment agreement does NOT stop interest and penalties from accruing. The balance continues to grow every month you are on the plan. Here is what you are actually paying:
Interest Rate
~8%
Federal short-term rate + 3%. Compounds daily.
Failure-to-Pay Penalty
0.25%
Per month while on an approved plan (reduced from 0.5%)
Setup Fee
$31–$225
Depending on setup method and income level
Example
You owe $15,000 and set up a 5-year plan at $300/month. Over 60 months, you pay $18,000 in principal payments — but interest has added roughly $3,500–$5,000 to the balance over that period. You will pay closer to $20,000+ total unless you pay ahead.
By law, signing an installment agreement pauses your Collection Statute Expiration Date (CSED) for the full duration of the agreement. A 6-year plan means the IRS gets 6 more years to collect after the plan ends.
Why this matters: If you have a tax debt from 2015 with a CSED of 2025 — and you sign a 3-year payment plan today — the IRS now has until 2028 to collect. You gave them 3 extra years.
For debts close to their expiration date, alternatives like Currently Not Collectible status may be significantly better — CNC does not extend the statute.
Installment Agreement
Currently Not Collectible
Check your assessment dates first: Know your CSED before deciding. If the debt is close to expiring, an installment agreement may be the worst option for you.
Request an immediate hold: If active collection is happening, request a hold immediately. This stops the bleeding while you decide whether a payment plan is right for your situation.
Compare to CNC and OIC: Payment plans are not always the best option. If your income is low, CNC may eliminate payments entirely. If you cannot realistically pay the full balance, an Offer in Compromise may settle for less.
Propose the lowest amount you can honestly afford: The IRS will accept reasonable proposals. Do not overcommit — defaulting on a payment plan restarts collection action and may make future agreements harder to obtain.
Our tax professionals can contact the IRS today and request a hold on collections while we review your situation.
No obligation. We will review your case and contact you.
Levies & Garnishment