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Tax Debt Installment Agreement

What is an Installment Agreement?

An Installment Agreement is an agreement between the taxpayer and the IRS that requires the taxpayer to pay the entire amount of the Tax Debt owed over a stated period of time.

  • The Pros:
    1. This method of resolution allows a debtor to pay the tax debt in smaller, more manageable amounts.
    2. The IRS must review and then accept (or reject) an Installment Agreement.

  • The Cons:
    1. Interest and penalties do not stop accruing when a taxpayer enters into an installment agreement. This could lead to substantially higher taxes owed than if the taxpayer were to pay the taxes outright. Due to the increase in taxes owed, it is often more beneficial for a taxpayer to simply pay the full amount of the tax debt with a credit card or bank loan than to pay it through an Installment Agreement.
    2. There is a minimal user fee associated with obtaining an Installment Agreement.
    3. You can't receive any tax refund while you are in a payment plan. Any refunds you would normally be entitled to a put towards the outstanding tax debt.

Installment Agreements are not a viable option for many taxpayers, if you need to discuss your tax situation please fill out our Free evaluation