How long does it take to get an IRS payment agreement?

How long does it take to resolve IRS back taxes?

In most cases, resolving a collection issue can range from a day (full payment or setting up an online payment plan) to 2 years (the amount of time the IRS has to make a decision on an offer in compromise). Most collection agreements are simple payment plans and don’t require much effort to arrange with the IRS. You can set up these agreements online or by filing a simple form with the IRS.

There are cases that may take longer to resolve. The IRS generally has 10 years to collect a tax debt (a period of time called the collection statute of limitations). Generally, when you won’t be able to pay your tax bill before the collection statute expires or when you owe more than $250,000, the time to resolve your issue will take longer than 2 years.

These more complicated situations usually involve more complex collection alternatives such as:

• Partial-pay installment agreements: This is when the IRS may not collect all the tax you owe before the statute expires.
• Currently not collectible status: This is when the IRS pauses collection on your bill because of financial hardship.
• Offer in compromise (OIC): This is when you can settle your tax bill for less than you owe.

Disputes will add more time to resolve the issue, because you would have to provide the IRS with more information or request an appeal to set up the agreement you want.

Here are the completion times for various collection solutions:

The general rule

If you can pay within 6 years and owe less than $50,000, you can generally set up a payment plan in a matter of days, if you have filed your current and last 6 years of tax returns. You can set up an agreement by phone, or use the IRS online payment arrangement tool.

If you set up direct payments from your bank account or paycheck, you’ll have to wait about 6 weeks for the IRS to finalize these payment arrangements.

If you owe between $50,000 and $250,000, and can pay before the collection statute expires, you can also set up a payment plan quickly by phone. However, the IRS must approve this plan, which may add a few weeks to the agreement time.

It takes longer if you need to provide detailed financial information to the IRS (Form 433 series, with supporting documentation). Taxpayers with more complicated issues and those not in filing compliance (haven’t filed current and/or past 6 years of tax returns) face a much longer resolution time.

Lastly, taxpayers who qualify and submit an OIC face up to a year engaging with the IRS, depending on the complexity of their situation and the amount of tax they owe. In addition, taxpayers commonly appeal OICs, which adds months to the process.

Do you have additional questions?

For help creating a strategy to address your tax issue, visit Jackson Hewitt’s Tax Resolution Hub to see the various ways we can help you.

About the Author

Jim Buttonow, CPA, CITP, is the Senior Vice President for Post-Filing Tax Services at Jackson Hewitt. He’s been a leader in helping taxpayers and tax professionals resolve tax problems with the IRS, where he had worked for 19 years in various compliance-enforcement positions. Prior to his current role, Jim’s consulting practice focused on the areas of tax controversy and tax administration, which included leading product development on tax problem software for tax professionals, testifying before Congress, advocating for IRS transparency and efficiency, and proposing innovative large-scale solutions for taxpayers and tax professionals. Jim is also the author of Tax Problems and Solutions Handbook, a publication aimed at helping tax pros work more effectively in post-filing matters and resolving their clients’ most common tax problems.

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