Streamlined Installment Agreement issues are covered on this web page. There are now several different types of Streamlined Installment Agreements dealing with unpaid balances over $25,000. Please refer back to our IRS Installment Agreement main page for more information on our services.
Streamlined Installment Agreement Information for individuals owing between $10,000 and $25,000
An IRS Streamlined Installment Agreement was at one time limited to a small group of delinquent taxpayers. Only individuals (no businesses or trusts or other entities) who owed between $10,000 and $25,000 to IRS in unpaid federal income taxes could qualify for this type of monthly payment plan.
Prior to November 2016 it was reserved for taxpayers who owed between $10,000 and $25,000. (Total IRS tax debts under $10,000 still qualify for Guaranteed Installment Agreements and is discussed at this link.)
[From November 16, 2016 through September 30, 2017 IRS will be testing a new set of Streamlined Installment Agreement criteria “for individual taxpayers who have filed all required returns and have an assessed balance of tax plus penalties plus interest between $50,001 and $100,000.”]
Rule #1 – If you owe less than $25,000 you can easily qualify for this status
During the test period IRS will assign this payment plan to individual taxpayers who owe less than $100,000 in what IRS refers to as their “aggregate unpaid balance of assessments.” This balance includes all federal income tax plus penalties and interest and fees and all other additions. But let’s keep our focus on the existing program that we know for sure that IRS will not abandon – those of you who owe IRS less than $25,000.
Rule #2 – You must be current with all tax returns filed
This rule has not changed. All of the taxpayer’s 1040 individual income tax returns must be filed and all income taxes must be assessed by the IRS computer system. No tax returns can be overdue and/or unfiled. If the taxpayer has any tax returns that have not been filed IRS will not approve any installment agreement of any type. In fact, each tax return for the previous five years must have been filed on time in order to qualify for any type of installment agreement. Therefore, this particular rule will disqualify many taxpayers.
Rule #3 – Financial disclosure forms are not required
Streamlined Installment Agreements are called “streamlined” by IRS because these types of agreements are designed for speed and fast approval much like their cousins, Guaranteed Installment Agreements. Therefore, they do not require any financial statement verification that is reported on Collection Information Statements such as IRS Form 433–A, Form 433-B, Form 433–D, or Form 433-F. Details of monthly income and expenses are not required or verified for Streamlined Installment Agreements.
Rule #4 – Your IRS Streamlined Installment Agreement will require full payment of all unpaid taxes within the next 8 years or 84 months
The maximum time allowed for a Streamlined Installment Agreement to be paid in full is now seven years, or 84 months. Therefore, if you owe the maximum amount of allowable income tax of $100,000 and IRS gives you 84 months to pay it off…. your minimum required monthly payment will be about $1,200.
The taxpayer (that’s you) may choose the day of the month when the payment is to be made. The IRS and many tax professionals like to use the 28th of the month for the payment dates. However, many taxpayers prefer to break up their payment corresponding to their pay days and IRS typically approves these requests. After all, IRS just wants its money and as long as it rolls in at a steady rate…. they’re happy.
Rule #5 – Additional Information
IRS will now not require Collection Information Statement (Form 433-A or Form 433-B or Form 433-D or Form 433-F) if the if the taxpayer agrees to make payment by direct debit from a bank account or as a payroll deduction from a pay check. Direct debit payments or payroll deductions are not required; however, if one of these methods is not used, then a Collection Information Statement is required by IRS; and you really don’t want to give them all that personal and financial information, do you?
A Notice of Federal Tax Lien will not be filed at the taxpayer’s county courthouse for tax balances less than $25,000.
IRS has not yet made available specific information on their new IRS Streamlined Installment Agreement test program for tax balances from $25,000 to $100,000. When it becomes available we will also make it available in plain language.
Streamlined Installment Agreement or Guaranteed Installment Agreement? Which is best for you?
Taxpayers who owe less than $10,000 may at some point in the future file an income tax return that shows a balance due that may not be paid due to financial difficulties that result in an inability to pay. If that balance due is not paid when the tax return is filed then the taxpayer’s installment agreement will default and IRS will begin enforced collection action against him/her.
The best solution to this problem would be to reapply for a new guaranteed installment agreement (if the total balance due is less than $10,000) or for a streamlined installment agreement (if the balance due is between $10,000 and $25,000). The best option will usually depend on the total amount owed and the future income and expense expectations of the taxpayer.
What you must not do!
Always when in an installment agreement payment plan situation, you should never file for bankruptcy except under extreme financial circumstances. Also, be aware that filing an Offer in Compromise with IRS will completely default your installment agreement status.
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We hope this IRS Streamlined Installment Agreement information has been helpful.