Can You Have Two Installment Agreements with the IRS?

When it comes to tax debt, the IRS is not a forgiving creditor. If you owe money to the government, you can expect penalties and interest charges on top of your original balance. And if you don’t take action to pay off your tax bill, the IRS can garnish your wages or seize your assets. This is where installment agreements come in handy.

An installment agreement with the IRS is a payment plan that allows taxpayers to pay their taxes over time. While they can be helpful for taxpayers, these agreements also do not absolve you of your debt. You still need to pay back what you owe in full, and if you miss a payment or default on the agreement, the penalties can be steep. Throughout this article, we’ll talk more about the types of installment agreements, how you can consolidate your debt into one payment plan, and whether an installment agreement is right for you.

Can you have two installment agreements with the IRS?

The simple answer is no, you cannot have two installment agreements with the IRS. A new unpaid tax balance due would put your existing installment agreement into default. If this happens, the IRS will require you to pay your previous and current tax debts at once, which many can’t afford.

However, if you have new tax debt, you can amend your existing agreement to include new tax balances. Do this before the tax year’s due date to avoid collections agencies and further penalties.

To do so, contact the IRS as soon as possible or use the online payment agreement tool to make an amendment to your existing plan. If you feel you can’t afford your monthly payment after consolidating your debt, complete form 433-F to see if you qualify for an offer in compromise instead.

How else can I manage my debt?

Maybe installment plans don’t sound right for you, and that’s okay. The IRS has more options available to help taxpayers manage their tax debts. On the other hand, if you need some additional help, speak with a tax relief company to learn what tax breaks you qualify for. We recommend comparing rates from a few companies before making your decision, which you can start doing right here.

Types of IRS installment agreements

Depending on the amount of taxes you owe, there are different installment agreements you may qualify for.

Guaranteed installment agreement

Guaranteed installment agreements are for taxpayers who owe taxes of less than $10,000 (excluding penalties and interest).

To qualify for this payment plan, you must also meet the following criteria:

• Have not failed to file any income tax returns or to pay taxes during any of the preceding five tax years.
• Must agree to fully pay the tax liability within three years or before the collection statute expiration date.
• Must not have entered into an installment agreement during any of the last five tax years.

Streamlined installment agreement

Taxpayers who owe less than $50,000 in taxes may be able to apply for a streamlined installment agreement.

To be approved for this IA, you must be willing to make payments for up to 72 months or before the collection statute expiration date. The minimum monthly payment for this agreement can be calculated by dividing the amount you owe by 72 or the number of months left before your CSED.

Non-streamlined installment agreement

The non-streamlined installment agreement is for taxpayers who owe more than $50,000 in tax debt and are not able to qualify for the streamlined installment agreement. With this non-streamlined method, you’ll need to provide extensive information about your assets, liabilities, income, expenses, etc., to the IRS. To do so, fill out and submit Form 433-F.

The information included in the form will then be used by the IRS to determine whether or not you qualify for this payment plan.

Partial payment installment agreement

If you aren’t able to pay your entire balance off by the collection statute expiration date (CSED), you may want to apply for a partial payment installment agreement (PPIAs). This payment plan will allow you to make affordable monthly payments. To qualify, you must first complete and submit Forms 433A so that the IRS can determine your ability to pay.

It’s important to know that the IRS might require you to first use the equity in your assets to resolve some of the current tax debt you owe. The IRS will also likely conduct a financial review every two years to determine whether your agreement may be changed or canceled depending on your financial situation.

What are the pros and cons of an IRS installment agreement?

While an installment agreement may sound like a great option for everyone that owes taxes, there are some disadvantages to these deals. Consider the points below before entering into an installment agreement with the IRS.