You can either resolve your entire tax debt with a single payment or break the debt into installments, if necessary. Paying in a lump sum is more advantageous in terms of saving money. The IRS charges penalties and interest until the amount due is paid in full.
A good way to avoid incurring substantial penalties and interest is to pay as much as you can up front. This automatically reduces the amount due and, in turn, the additional fees you’ll be billed over time.
The primary benefit to paying back taxes in installments is time. You can elect an installment plan that fits within your financial means. Paying in installments helps you to pay off your tax debt without compromising your living situation.
Depending on which method of resolution suits you more, you can either pay your tax debt in a lump sum or in monthly Installments. Depending on how much is owed, taxpayers may be required to provide extensive financial information to the IRS to be approved for a payment plan. After the IRS has reviewed their financial ability and other basic eligibility requirements, a determination will be made regarding installment agreement approval.