We can help set up a realistic payment plan to pay back the IRS/State. We will attempt to get you the lowest possible installment possible. We will work to prevent garnishments, bank levies or liens from being filed against you or your assets.
Paying your full tax debt immediately is ideal because it avoids interest and penalties that can reach 8–10% annually. When that’s not possible, the IRS allows taxpayers to set up an installment agreement to pay over time. This flexible payment plan can help you stay compliant and avoid harsh collection actions.
The IRS offers four primary options depending on how much you owe and your financial situation:
Guaranteed Installment Agreement: For debts under $10,000 (excluding penalties and interest). Must be paid within three years and requires on-time filing of all tax returns. The IRS will not file a federal tax lien if you qualify.
Streamlined Installment Agreement: For debts up to a higher IRS-set threshold, with fixed monthly payments based on your total balance and repayment term.
Non-streamlined Installment Agreement: For larger debts or when your situation doesn’t meet streamlined criteria. Payment terms are negotiated directly with the IRS.
Partial Payment Installment Agreement: Allows you to pay a reduced monthly amount when full repayment isn’t possible, subject to periodic financial reviews.
To qualify for a guaranteed agreement, you must:
Owe less than $10,000 (excluding penalties and interest).
Be current with all tax filings and not have another active installment plan.
Show you can’t pay the full amount within 120 days but can pay in three years or less.
Commit to at least the minimum monthly payment (total liability divided by 30).
This plan helps you avoid a federal tax lien while you repay the balance.
If you already have a federal tax lien, the IRS may keep it in place until the balance is paid.
Interest and penalties continue to accrue until the debt is fully satisfied.
Your existing installment plan is paused if you switch to a new arrangement.
The IRS provides an online payment agreement tool to check eligibility and apply.
Once your agreement is approved, stay current on all future tax filings and monthly payments. Missing a payment can default the plan and restart collection actions. If your plan involves more than 12 installments, budget carefully until the IRS issues a lien release (if applicable).
Choosing the right IRS payment plan can be complex. Our experienced tax professionals can review your finances, recommend the best agreement type, and negotiate directly with the IRS. Contact City Tax Services today to set up an installment plan that fits your budget and stops aggressive collection efforts.
Related Installment Agreement Resources: Can You Have Two Installment Agreements With the IRS? | What Happens If I Default on My IRS Payment Plan? | Payment Plans with the IRS: Which Option Is Best for You? | IRS Payment Plan Got Denied—What Are My Options?
