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IRS installment agreement Plan

Can you have two installment agreements with the IRS?

What are your repayment options when you can’t pay all the taxes you owe in one lump sum? You can set up an IRS payment agreement, depending on your situation. While it’s straightforward to do this for one tax year, how can you set up additional installment agreements? Find out in our guide below.

What is an IRS installment agreement?

An IRS installment agreement allows you to pay down your tax balance over time. You’ll make regular payments to cover the original balance, along with additional interest and penalties in some cases. You’ll need some basic information to set up an installment agreement, including:

  • The amount owed

  • Your most recent tax return

  • Your banking details

  • Your contact information

How to request an installment agreement

You have several options when it comes to asking for an installment agreement, all of which require getting in touch with the IRS. Perhaps the easiest way to get started is with the IRS online payment agreement tool, which asks you to fill out some basic information.

If you owe less than $50,000 all in, you can complete the request completely online. For outstanding balances over this amount, you may need to download and submit some additional paperwork. It’s best to check directly on the IRS website for the latest IRS installment agreement form.

Types of installment agreements

The best type of installment agreement will depend on the amount you owe the IRS and how quickly you can pay. There are several types of agreements to choose from, but the following are most common:

Guaranteed installment agreement

If you owe less than $10,000 and can pay the full balance within 120 days or four months, you might qualify for the short-term guaranteed installment agreement. Here are the additional eligibility requirements for this type of payment plan:

  • You don’t already have another installment agreement

  • You have paid all required taxes and filed your returns over the past five-year period

  • You will be able to repay your total balance along with penalties and interest within the required timeframe

Because it’s short-term and straightforward, no setup fees are required. You also won’t need to deal with a federal tax lien, which means there will be no impact on your credit rating.

Streamlined installment agreement

The second type of agreement is the streamlined installment agreement. Like the guaranteed agreement, it’s available if you owe less than $50,000 including penalties and interest. However, there’s a longer timeframe to pay the IRS. You have up to 72 months to pay off your balance, with minimum monthly payments of at least $25.

Non-streamlined installment agreement

A third option is the non-streamlined installment agreement, which applies to individual taxpayers owing more than $50,000. This type of agreement requires that you fill out the IRS Form 433-F, which asks for additional information including:

This information forms a full financial picture of you and your business, which helps the IRS work out a suitable installment payment plan.

Can you have two installment agreements with the IRS?

You can add to the installment agreement for taxes owed in a future tax year, but this doesn’t qualify as a second agreement. You’re simply amending the first with new payment terms. Unfortunately, the answer to “Can you have two installment agreements with the IRS” is no, you can only consolidate years together into one payment plan.

However, it’s important to act quickly because once the IRS has assessed a new tax balance, your current agreement is in default. You’ll need to request an amendment to the existing agreement using the online payment agreement tool. Be sure to include information about the original and new balance.

The bottom line

The IRS works together with taxpayers to create a suitable payment plan. However, if you don’t get in contact to make these arrangements, consequences can be steep. The IRS can seize your assets, garnish wages, place tax levies on bank accounts, and even press charges. This is why you should always get in touch with them to discuss your options if you’re having difficulty paying your tax bill.

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