Sam Brotman, JD, LLM, MBA October 3, 2013 7 min read

Streamlined IRS Payment Plans

Introduction to Streamlined IRS Payment Plans

One of the ways that you can resolve a liability is with an IRS payment plan. The IRS generally accepts payment plans when the taxpayer does not have sufficient assets available to pay their liability in full. Payment plans are seen as a method of compromise by the Service that the taxpayer to avoid any adverse collection activity (assuming they remain true to the conditions of the payment plan) while paying down their liability to the government. However, IRS payment plans can be difficult to negotiate, in part because the IRS usually requires a complicated financial statement on the part of the taxpayer. A little known trick to taxpayers though is that you are sometimes able to set up a payment plan and it is virtually guaranteed to be accepted without having to undergo much of the financial disclosures generally required by the IRS. These are known as streamlined IRS installment agreements or streamlined IRS payment plans.

IRS Requirements and Benefits of a Streamlined IRS Payment Plan

There are a few basic requirements to qualify for this type of tax relief. First, as is a requirement with any of the IRS payment plans, the taxpayer must be current on all tax filings and be up to date on all estimated tax payments over the course of the year. Part of the incentive for the IRS in setting up payment plans is that the taxpayer abide to the terms of this agreement and it will not set up an IRS payment plan in an instance where they feel that the amount owed to the government could actually increase. Second, the taxpayer must be able to satisfy their liability in full including all applicable penalties and interest[1] before the expiration of the collection expiration statute date (CESD)[2] or a five year time period (seventy two months or less), whichever is shorter. Third, a taxpayer must have a balance due (including interest and penalties) of fifty thousand dollars or less to qualify for a streamlined payment plan. Finally, the taxpayer must agree to have the installment payments set up on a direct debit system so that it automatically deducted from their checking account.

However, as I mentioned previously, setting up a streamlined payment plan will alleviate the necessity of having to fill out a collection information statement to qualify (although the IRS still may request limited financial information to ensure that you cannot pay the balance in full). In addition, if the IRS has not filed a lien against the taxpayer, they will generally agree not to file one and no independent lien determination will be made. The IRS will also charge you a small fee to complete the setup of your payment plan ($105 for new agreements, $45 for reinstated agreement, and $52 for direct debit agreements). [3]

In closing, if you meet the requirements for one of the streamlined IRS payment plans then they are a great way to alleviate your balance due without too much effort expended. They can be set up quickly and easily by calling Automated Collections Systems[4] or by visiting your local IRS service center. If you have any further questions or if I can do anything else to assist you, please feel free to get in touch with me by using the contact information on my website. However, I hope by using the information contained in this article that you will be able to resolve your IRS liability without resorting to professional representation.

Need help with an IRS payment plan? Please visit any of the following for more information.

Tax resolution services for small businesses and mid-size businesses (business tax resolution)

Tax resolution services for self-employed individuals and independent contractors (individual tax resolution)

Tax resolution services for individuals and families (individual tax resolution- W2 and wage earners)

Legal representation before IRS collections

Brotman Law request consultation

 


[1] Payment of all applicable interest and penalties is mandatory for all streamlined IRS payment plans under the Internal Revenue Manual. Please see: IRM 5.14.1.1 available at http://www.irs.gov/irm/part5/irm_05-014-001.html

[2] For more information on what the CESD is and how it is calculated, please refer to my article on the subject, which can be found here.

[3] All the requirements for streamlined IRS payment plans can be found here: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Fresh-Start-Installment-Agreements

[4] Here is more information regarding Automated Collections Systems.

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Sam Brotman, JD, LLM, MBA

Owner and Director of Legal
Brotman Law

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