When you owe money to the Internal Revenue Service (IRS), one favorable option for resolving the tax debt is to set up an installment agreement, which allows you to pay the debt through affordable monthly payments over time. The IRS offers streamlined installment agreements with minimal financial disclosures for certain taxpayers who meet specific criteria. How do you know if you qualify for one of these more straightforward payment plans?
Who Qualifies for Streamlined Agreements?
The IRS has outlined clear guidelines allowing streamlined processing and acceptance of installment agreements for taxpayers who meet the following criteria:
Individuals:
- Your total tax debt is $50,000 or less, including all penalties and interest
- Your proposed monthly payment will pay off the debt within 6 years
- You agree to comply with federal tax filing and payment rules going forward
- You can provide proof of current income with paystubs/earnings statements
Businesses:
- Your total tax debt is $25,000 or less, including penalties/interest
- Your business has been operating for at least 2 years
- Your proposed monthly payment will pay off the debt within 2 years
- You agree to stay current on all tax deposit and filing requirements
For individual and business taxpayers meeting these criteria, the IRS will streamline the approval of a payment plan without requiring extensive financial documentation or wage/expense analysis.
Who Does Not Qualify?
While the streamlined installment agreement option is appealing, many taxpayers unfortunately don’t meet the qualification standards. Factors that would disqualify you include:
- Total tax debt exceeding $50,000 (individuals) or $25,000 (businesses)
- Inability to pay the debt in full within the 6-year (individual) or 2-year (business) window
- Not being current on all filing/payment responsibilities
- Prior histories of defaulted installment agreements
- Bankruptcy filings that impact eligibility
The IRS may require additional financial disclosures and substantiation beyond streamlined processing if you are a higher-income wage earner or have significant asset equity.
The Bottom Line
For individual taxpayers owing $50,000 or less or businesses with debts under $25,000, exploring eligibility for a streamlined IRS installment agreement could simplify establishing an affordable monthly payment plan.
Reviewing your full tax transcript and circumstances with a qualified professional can help determine if you meet the criteria for streamlined processing. While these types of agreements may be more limited, they provide relief for taxpayers resolving more modest IRS debts.
Schedule a call with me today to see if a streamlined installment agreement is right for you.
