The IRS has a variety of payment plans, which it calls “Installment Agreements”. For example, if someone owes less than $10,000, they can enter into a “guaranteed” installment agreement, which means that yes, the IRS will guarantee the taxpayer to repay the debt over a period of time.
Another form of payment plan is called a “Streamlined Installment Agreement”, which is for IRS tax debts of less than $50,000. The IRS will likely agree to permit the taxpayer to repay the tax debt over either a 72 month or 84 month time period. Simply put, let’s say that the balance was $48,000, then a 72 month payment plan would be in the vicinity of $675 a month. Yes, there is still interest that accrues on the debt, but there are numerous other benefits from entering into this type of agreement.
- You do not have to provide the IRS with any of your financial information or documents. The IRS will not ask you about any assets you might own, or what other income you have;
- Your agreement does not have to be approved by IRS supervisors. In other words, this can be a quick process;
- You do not need to worry about the IRS reasonable expense standards that I have written about elsewhere, and
- If you agree to a Direct-Debit Installment Agreement (which is where the payment comes out automatically from your bank account every month), then you may be able to have the IRS withdraw the liens that it may have filed against you. Note that this is within the discretion of the IRS and they usually require that the balance be paid down below $25,000 for the liens to be withdrawn.