The Installment Agreement is one of the most commonly used tax debt payment plans. Taxpayers who are looking to pay their back taxes, but cannot afford to pay the entire amount can apply to pay it in fixed monthly payments under an Installment Agreement. To make the resolution process easier, the IRS has introduced flexibility in paying tax debt with the Installment Agreement.
Under its Fresh Start initiative, the IRS has increased the maximum dollar for Streamlined Installment Agreement from $25,000 to $50,000. The maximum payment term also increased from 60 months to 72 months. Taxpayers can now pay their tax debt under an Installment Agreement more comfortably.
This IRS debt payment plan is only available to those taxpayers whose financial capability allows them to pay their tax debt in full. It does not involve a reduction of tax debt, only eases the process of payment.
The IRS will continue charging penalties and interest on any tax debt amount that remains to be paid even if taxpayers begin to pay their back taxes under an IRS payment plan. Therefore, the more taxpayers pay initially, the less interest they will pay overall.
Taxpayers who meet the eligibility criteria of an Installment Agreement may find out more about the current policies of the IRS regarding this tax debt payment plan or consult a tax specialist.