IRS Installment Agreement: Benefits & CPA Assistance

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Ergedine Pericles, May 8, 2025

Introduction

If you’ve filed a return and owe the IRS—but can’t pay your liability in full — ignoring it only worsens the problem. The IRS offers installment agreements: structured payment plans that let you repay over time. In this post, you’ll learn what an IRS installment agreement is, the key benefits of enrolling, why a CPA can be your strongest ally, and exactly what you must do after your plan is approved. Whether you’re facing back taxes, penalty abatement, or cash‑flow challenges, this guide will help you take control.

What Is an IRS Installment Agreement?

An IRS installment agreement is a formal arrangement permitting you to pay overdue tax liabilities in monthly installments rather than a lump sum. Agreements fall into two groups:

Short‑Term Payment Plans

1. Short‑Term Installment Agreement: Pay in full within 180 days—no setup fee.

Long-Term Payment Plans

1. Guaranteed Installment Agreement (Individual Income Tax Only):

   • Up to $10,000 tax owed (excludes interest and penalties)

   • Payable within three years

   • No financial statement required

   • Apply online, by phone, or via mail

2. Streamlined Installment Agreement:

   • Up to $25,000 total liability (tax, penalties, interest) for individuals and businesses

   • $25,001–$50,000 total liability (tax, penalties, interest) for individuals and out‑of‑business sole proprietors (direct debit or payroll deduction required)

   • Payable within 72 months (six years)

   • No financial statement required

   • Apply online, by phone, or via mail

3. Partial Payment Installment Agreement (PPIA):

   • Any amount you can’t fully repay before the Collection Statute Expiration Date (CSED)

   • Requires Collection Information Statement (CIS) Form 433‑A, 433‑B, or 433‑F and a financial review every two years

   • May trigger a federal tax lien

   • Apply by phone or mail

4. Routine/Regular Installment Agreements:

   • Any amount that does not qualify for the Guaranteed or Streamlined options,

   • Full Pay by Collection Statute Expiration Date (CSED)

   • Collection Information Statement (CIS) required (Form 433‑A or 433‑B)

   • May trigger a federal tax lien

   • Apply by phone or mail

5. In‑Business Trust Fund Express Agreement:

   • For businesses with payroll‑related trust fund liabilities under $25,001

   • Payable within 24 months or by the CSED, whichever is earlier

   • Direct debit required for liabilities between $10,000 and $25,000

   • No financial statement required

   • Apply online, by phone, or via mail

Note: Once approved, an installment agreement halts enforced collection actions—like bank levies or wage garnishments—as long as you remain compliant and file all future returns on time. Interest and penalties, however, continue to accrue until the balance is paid in full.

Key Benefits of an Installment Agreement

1. Immediate Relief from Collection Tactics: The IRS generally suspends liens, levies, and garnishments once you’re approved.

2. Budget‑Friendly Payments. Customize monthly amounts to match your cash flow, easing budgetary strain.

3. Reduced Failure‑to‑Pay Penalty. Staying current can lower the penalty rate from 0.5% to 0.25% per month.

4. Credit Preservation. Compared to bankruptcy or default, installment agreements often have a less damaging impact on credit.

5. Flexible Modifications: If your financial situation changes, you can request a modification of your agreement to lower your monthly payment or extend terms.

Leveraging these benefits can help you restore financial stability while working toward full tax compliance.

Why Hire a Certified Public Accountant (CPA) to Assist You

For individual debts over $50,000 — or business liabilities over $25,000 — partnering with a CPA can significantly improve your chances of approval and optimize your terms. Here’s how we help:

   • Expert Eligibility Assessment. We’ll analyze your income, expenses, and assets to determine the best agreement type.

   • Accurate IRS Filings. We ensure all forms (Form 9465, Form 433‑A, 433-B or 433-F) are completed correctly, reducing the risk of rejection.

   • Strategic IRS Negotiation. Our familiarity with IRS procedures enables us to negotiate longer payment periods or lower monthly amounts.

   • Penalty Abatement & Alternatives. We’ll explore whether penalty abatements apply and if options like an Offer in Compromise (OIC) or Currently Not Collectible (CNC) status are more appropriate.

   • Ongoing Compliance Monitoring. After setup, we track payments, future tax filings, and IRS notices so you never accidentally default.

Ready for expert help? See our Document Readiness Guide: What to Prepare Before First Call with Ergedine Pericles, CPA, P.A.

Your Responsibilities After Plan Approval

Ongoing Compliance

1. Make Timely Payments. Schedule automatic withdrawals or pay via IRS Direct Pay by each due date.

2. File All Returns on Time. Continue to file and pay current‑year taxes by their deadlines.

3. Maintain Accurate Records. Keep copies of payment confirmations and IRS correspondence.

4. Monitor IRS Notices. Respond promptly to any IRS letters or calls to avoid unintended default.

Modification Options

1. Request Adjustments if Needed. If your financial situation changes, we can file Form 433‑F to lower payments or extend terms.

Warning: Failure to meet these obligations can result in plan default and the reinstatement of aggressive collection actions.

Conclusion

An IRS installment agreement offers a clear, manageable path to resolving tax debt. By understanding your options, leveraging the plan’s benefits, and partnering with a CPA, you’ll streamline approval and stay in compliance.

Related Resources:

IRS Tax Resolution: Frequently Asked Questions

IRS Income Tax Compliance: Frequently Asked Questions

Need personalized assistance? Contact us today to discuss your unique tax situation.