IRS Installment Agreement Negotiation
Introduction to IRS Installment Agreement Negotiation
When the Internal Revenue Service sends you a letter that indicates you have an outstanding tax liability, you need to act quickly. Without immediate action, the IRS will expect you to pay the entire amount of taxes owed or balance due, including interest and penalties. You have payment options; however, an installment agreement is one of the best options to manage your unpaid balance owed to the IRS. An installment agreement is a repayment plan that allows eligible taxpayers to pay their outstanding tax debt over time, rather than in a single lump sum.
Installment Agreements help individuals and businesses manage their financial obligations by breaking the balance into affordable and manageable monthly installments based on their income and expenses. Critically, entering into an installment agreement prevents aggressive collection actions such as IRS levies on your bank account, wage garnishments, and filing federal tax liens. Once an installment agreement is approved, the IRS generally suspends most collection actions, which allows individuals and businesses the flexibility they need to stabilize their financial situation.
In all but the most basic Installment agreements, the IRS evaluates a taxpayer’s financial condition before approving installment agreements, and working with an experienced tax attorney at Booth P.C. is essential in securing favorable terms. Our tax attorney will present financial information strategically based on your situation, challenge IRS errors, and negotiate a lower monthly payment or more flexible arrangement. Effective negotiation with the IRS is the only way to get the best monthly payment terms, and the IRS will not automatically offer the best terms available. Poorly prepared Installment agreement applications often result in higher payments than necessary. With knowledgeable guidance and targeted negotiation on your behalf by Booth P.C., installment agreements can be negotiated that not only resolve your tax debt but also protect your long-term financial stability.
Understanding IRS Installment Agreements
Installment agreements allow taxpayers to repay their tax debt gradually rather than all at once. This flexibility is especially helpful for individuals and businesses facing financial difficulties, as it allows for a more manageable series of monthly payments instead of an overwhelming lump-sum payment. The IRS offers two primary types of Installment Agreements: short-term payment plans, generally for debts that can be paid within 180 days, and long-term installment agreements, which extend payments over many months up to 10 years in certain cases. Understanding your options is crucial, as eligibility, fees, and reporting requirements can vary significantly.
Monthly payment plans through Installment Agreements are designed to reduce the anxiety and financial pressure associated with a large tax debt. However, choosing the right Installment Agreement is critical, and the IRS doesn’t automatically place taxpayers into the most favorable monthly payment plan, and often excludes taxpayers from all payment plans.
At Booth P.C., our law firm will assess your full financial picture, determine which agreement best aligns with your budget and long-term goals, and negotiate terms that minimize penalties or unnecessary hardship. Guidance from the skilled tax attorney at Booth P.C. ensures taxpayers not only regain control of their finances but also avoid costly mistakes that could complicate IRS compliance.
Types of IRS Installment Agreements
IRS installment agreements generally fall into three main categories: streamlined installment agreements, non-streamlined installment agreements, and partial payment installment agreements (PPIAs).
Streamlined Installment agreements are the simplest and most basic Installment Agreements and are designed for taxpayers who owe certain IRS thresholds and can pay their balance within a set period, typically 72 months. Streamlined Installment agreements require minimal financial disclosure and relatively little documentation and allow taxpayers to quickly secure a payment plan without IRS scrutiny of their income and expenses.
Non streamlined Installment agreements apply to larger debts and/or situations where taxpayers need longer payment periods than 72 months. These arrangements require detailed financial statements and IRS negotiation, as the IRS evaluates what the taxpayer can reasonably afford based on several factors. Both streamlined and non-streamlined installment agreements are designed to fully pay the balance due to the IRS within the period of the Installment payment agreement.
Partial payment installment agreements are unique, as they allow taxpayers to make monthly payments that do not fully satisfy the tax debt before the collection statute of limitation expires (10 years). As a result, the taxpayer ultimately pays less than the full amount owed (the remaining balance is written off as non-collectible), making partial payment installment agreements a powerful tool for those who cannot afford a standard plan, such as those with low-income taxpayer status.
In addition to installment agreements, the IRS also offers other debt payment options. One of the most popular options is Offers in Compromise (OICs). The primary difference between and In stallment Agreement and an Offer in Compromise is that installment agreements determine tax debt payment affordability over time, while approved OICs settle the tax debt for a lump-sum or short-term payment at an amount less than what is owed
Both Installment Agreements and Offers in Compromise provide flexible payment options (as opposed to the standard lump sum payment expected by the IRS), installment agreement may allow for more flexibility compared to OIC. When you retain Booth P.C., we will analyze your situation to determine the best strategy depending on your financial capacity, long-term financial outlook, and whether reducing the total liability is warranted.
Benefits of Negotiating an Installment Agreement
Negotiating an IRS installment agreement can often lead to significantly more affordable regular monthly payments, especially when a taxpayer’s financial circumstances are clearly documented and strategically presented. Through effective negotiation, taxpayers may secure payment terms that reflect their true ability to pay, rather than the amount determined by the IRS. An approved Installment Agreement not only reduces immediate financial pressure but also helps prevent aggressive collection actions, such as wage garnishments, bank levies, and federal tax liens. Once an installment agreement is approved and the taxpayer remains in compliance, the IRS generally suspends these enforced measures, allowing individuals to focus on rebuilding their financial stability rather than fighting unexpected seizures of income or assets.
The benefits of a confirmed Installment Agreement extend beyond protecting wages, property, and assets. By entering into a properly structured installment agreement, taxpayers will mitigate the rapid accumulation of penalties and interest that accompanies unresolved tax debt. Over time, this creates long-term financial relief and allows for more responsive dealing with your future tax obligations.
Eligibility for an Installment Agreement
Qualifying for an IRS payment plan requires meeting specific eligibility criteria designed to ensure the taxpayer can realistically manage the monthly payment amount, including accumulating penalties and interest. The IRS evaluates several factors, including a taxpayer’s income, necessary living expenses, available assets, and overall tax compliance history. Taxpayers must be in tax compliance (filed all required tax returns), as the IRS will not approve an installment agreement for someone who is not current with their tax filings. Additionally, the agency reviews whether the taxpayer has previously defaulted on a payment plan, whether they have equity in assets that could be liquidated, and whether their budget supports the requested payment amount. These factors are critical in the IRS’s determination of the most appropriate type of installment agreement and ensure the taxpayer can maintain compliance throughout the payment period.
Because the IRS must confirm a taxpayer’s ability to pay, financial disclosures are required, especially for non-streamlined or partial payment installment agreements. Forms such as the 433-A, 433-F, or 433-B provide detailed information about income, expenses, debts, and assets. Completing these forms accurately is critical, as they play an outsized role in determining your eligibility for and Installment Agreement on terms favorable to your situation. At Booth P.C., our tax lawyer has over 15 years of experience in IRS Collection and will strategically organize your financial data, identify allowable expenses the IRS might overlook, and zealously advocate and negotiate for the lowest feasible monthly payment.
The Process of Applying and Negotiating IRS Payment Plans
There are several ways to apply for an Installment Agreement. The least intrusive method is applying online through the IRS Online Payment Agreement tool, which is available for individuals who have a tax liability below a certain amount. You can also apply via Telephone for these kinds of Installment Agreements.
In more complex cases, or when the tax liability is more significant, filing Form 9465 (Installment Agreement Request)—often accompanied by Form 433-A, 433-F, or 433-B—is the best way forward. These forms are typically used when requesting a non-streamlined or partial payment agreement, or when a taxpayer needs to formally present financial information for review.
No matter how the application is submitted, the IRS requires thorough documentation to determine both your eligibility and your monthly payment. Documentation about income sources, necessary living expenses, debts, and assets such as bank accounts, vehicles, or property. The IRS uses this information to calculate a taxpayer’s “reasonable ability to pay,” guided by strict national and local expense standards. Strategic, accurate preparation of an Offer in Compromise application is critical, as even minor errors or omissions in documentation can delay approval, result in a higher monthly payment than necessary, or even result in rejection of the payment plan, which will subject you to aggressive IRS collection action.
Skilled tax attorney representation makes a critical difference throughout this process. A Booth P.C. tax attorney not only ensures the application and financial disclosures are accurate and complete but also advocates for the most favorable repayment terms. Booth P.C. has an intimate understanding of IRS procedures and negotiation tactics and is skilled at framing a taxpayer’s financial situation in a way that justifies lower payments or more flexible terms. By handling communications with the IRS and navigating the complex rules that govern installment agreements, Booth P.C. helps taxpayers avoid missteps, secure manageable monthly payments, and achieve a more sustainable path toward resolving their tax debt.
What Happens if You Default on a Payment Plan
Missing payments on an IRS installment agreement can trigger serious and sometimes immediate consequences, including the termination of the installment agreement. If a taxpayer defaults on the payment plan, the IRS typically sends a notice informing the taxpayer that the agreement may be terminated, and if payment is not promptly made, the agreement will be formally revoked. Sometimes this can occur after just one missed payment or after a pattern of late payments, depending on the taxpayer’s compliance history, including tax filings and prior payments. Once an agreement is terminated, the taxpayer loses the protections the installment agreement provided, placing them at risk of immediate IRS Collection actions.
After a default, the IRS will pursue aggressive collection measures, including wage garnishments, bank levies, tax refund seizures, and federal tax liens. Installment agreements can sometimes be reinstated if quick action is taken. In some cases, a modified installment agreement with revised terms may also be negotiated to better reflect the taxpayer’s current financial situation, but this can be very difficult.
Retaining Booth P.C. to represent you is essential when dealing with an installment agreement default. Our tax attorney will communicate directly with the IRS, stop pending enforcement actions, and negotiate reinstatement or restructuring of the agreement. By presenting clear, updated financial information and advocating for manageable repayment terms, Booth P.C. helps protect your income and assets while restoring your installment agreement.
Why Work with an IRS Installment Agreement Negotiation Lawyer at Booth P.C.
Having a lawyer at Booth P.C. advocate during IRS installment agreement negotiations offers significant advantages, especially when navigating complex financial disclosures and strict IRS requirements. Our experienced tax attorney understands the IRS’s evaluation process and can identify the most beneficial payment structure, whether it’s a streamlined plan, non-streamlined agreement, or partial payment installment agreement. With Booth P.C.’s professional guidance, taxpayers avoid overpaying each month or committing to terms that don’t reflect their true financial capacity—issues that often lead to unnecessary hardship or future default.
Booth P.C.’s legal expertise reduces the risk of penalties, defaults, or rejected applications, all of which can trigger harsh IRS collection actions. Booth P.C.’s tax attorney ensures that your financial documentation is complete, accurate, and strategically presented to increase the likelihood of Installment Agreement approval on favorable financial terms. Contact Booth P.C. today and take a proactive step toward financial stability.
Frequently Asked Questions
What is an IRS installment agreement, and how can an attorney help me negotiate it?
An IRS installment agreement is a formal arrangement under IRC § 6159 that allows a taxpayer to pay outstanding federal tax liabilities over time rather than in a lump sum, while avoiding or stopping enforced collection such as liens, seizures, and levies. An attorney can help negotiate an installment agreement by evaluating eligibility for streamlined or non-streamlined options, preparing and positioning financial disclosures on Forms 433-A or 433-F, advocating for affordable payment terms consistent with IRS collection standards, addressing penalties, interest, and compliance issues, and negotiating with IRS Automated Collection System personnel, Revenue Officers, or Appeals to prevent default, limit liens, or modify existing agreements when circumstances change.
Why should I hire a lawyer to negotiate an IRS installment agreement instead of handling it myself?
Hiring a tax lawyer to negotiate an IRS installment agreement is critical because the process is less about filling out forms and more about strategic thinking and positioning while navigating IRS collection rules and requirements, where small missteps can lead to higher payments, liens, or default. An experienced tax attorney understands how the IRS calculates “ability to pay” using national and local expense standards, how to present financial information to minimize disposable income without misrepresentation, how to choose the most favorable agreement type (such as streamlined versus non-streamlined), and how to negotiate directly with ACS, Revenue Officers, or Appeals to stop enforcement actions and protect your assets. An experienced tax attorney also ensures legal compliance, preserves privileges, anticipates future risks like default or lien filing, and can pursue alternative resolutions if an installment agreement is not the best outcome.
How do I modify an existing IRS installment agreement?
You can modify an existing IRS installment agreement by requesting a change in terms due to a material change in financial circumstances, such as reduced income, increased necessary expenses, or other hardship, typically by submitting updated financial information on Form 433-A or 433-F and contacting the IRS unit responsible for your account (ACS or a Revenue Officer). The IRS will reevaluate your ability to pay under current collection standards and may approve a lower monthly payment, a temporary suspension, or a different agreement type, but it will require that all current filing and payment obligations are up to date. A tax attorney will help frame the request strategically, document the change in circumstances, prevent default during review, and, if necessary, pursue modification through IRS Appeals if the request is denied.
What happens if I default on an IRS installment agreement?
If you default on an IRS installment agreement, typically by missing payments, failing to stay current on new tax obligations, or not providing requested financial information, the IRS usually terminates the agreement and resumes enforced collection actions, including filing or enforcing federal tax liens and issuing bank or wage levies after providing the required notice. Default also accelerates the IRS’s ability to collect the full balance immediately and can make it harder to secure favorable terms in a new installment agreement, often requiring full financial disclosure and higher payments. A tax attorney will often prevent default by negotiating a reinstatement or modification, requesting collection holds, and ensuring compliance issues are cured before enforcement resumes.
How long does it take for an IRS installment agreement to be approved?
The time it takes for an IRS installment agreement to be approved depends on the type of agreement and how it is submitted, ranging from near-immediate approval to several weeks or months. Streamlined installment agreements, generally for individuals who owe within certain IRS thresholds and can pay within the allowed time, are often approved automatically or within days when requested online or by phone, while non-streamlined agreements that require financial disclosure on Forms 433-A or 433-F are reviewed by ACS or a Revenue Officer and may take several weeks, especially if documentation is requested. Having an attorney involved will often shorten the process as a skilled attorney will submit a complete, well-reasoned, legally sufficient request, responding quickly to IRS inquiries, and securing collection holds while the agreement is under review.
Can an attorney stop IRS collection actions while negotiating an installment agreement?
Yes, an experienced tax attorney can often stop or pause IRS collection actions while an installment agreement is being negotiated by utilizing the IRS’s internal collection hold procedures and statutory protections that apply once a good-faith request is pending. When a complete, accurate installment agreement request is submitted, the IRS generally suspends levies during review and, if the agreement is accepted, while it remains in effect, although liens may still be filed in some cases. An experienced tax attorney knows how to quickly secure these holds with ACS or a Revenue Officer, ensure the request is deemed complete, address imminent levy threats, and preserve appeal rights if the IRS attempts enforcement during negotiations.
What financial documents are needed to negotiate an IRS installment agreement?
To negotiate an IRS installment agreement, particularly a non-streamlined agreement, you typically must provide detailed financial documentation to be included in a Form 433-A (individuals) or 433-F, such as recent pay stubs or profit-and-loss statements, bank statements, documentation of monthly living expenses (rent or mortgage, utilities, insurance, transportation, medical costs), and records of assets such as real estate, vehicles, retirement accounts, and investments. The IRS uses these documents to calculate your ability to pay under national and local expense standards and to assess equity in assets, so completeness and proper categorization are critical. An experienced tax attorney helps organize and present this information strategically, ensuring allowable expenses are properly claimed, unnecessary disclosures are avoided, and the resulting payment proposal is sustainable and defensible.
Can I switch from an installment agreement to another IRS tax debt relief program?
Yes, you can switch from an IRS installment agreement to another tax debt relief program if your circumstances change or if the installment agreement is no longer the most appropriate collection alternative. You must, however, remain compliant with current filing and payment obligations. Taxpayers commonly transition from an installment agreement to an offer in compromise, currently not collectible status, or a modified installment agreement after experiencing reduced income, increased expenses, or determining that their ability to pay was overstated. An experienced attorney can evaluate eligibility for alternative programs, manage the transition to avoid default or enforcement, coordinate required financial disclosures, and negotiate with the IRS to place collection on hold while the new relief request is under consideration.
How does Booth P.C. assist with IRS installment plan negotiation?
Booth P.C. assists with IRS installment plan negotiation by providing complete and zealous representation focused on minimizing monthly payments, stopping collection pressure, and structuring agreements that are sustainable long term. Our firm evaluates whether a client qualifies for a streamlined or non-streamlined installment agreement, prepares and strategically presents financial disclosures under IRS collection standards, and negotiates directly with the IRS, whether through ACS, a Revenue Officer, or Appeals, to secure affordable terms while protecting assets and reducing enforcement risks. By handling communications, securing collection holds during negotiations, and addressing compliance or default issues proactively, Booth P.C. positions clients for installment agreements that align with both their legal rights and IRS rules and guidelines to get installment agreements approved.