Three simple IRS payment plans

The simplest IRS long term payment plans to setup are:

  • 36-month payment plan: Guaranteed Installment Agreement (GIA)
  • 72-month payment plan: Streamlined Installment Agreement (SLIA)
  • Full-pay non-streamlined installment agreement (NSIA): As of March, 2020, the IRS removed the 84-month agreement (Streamlined Processing Payment Plan Pilot Program or SLIA for amounts owed between $50,000 – $100,000). The IRS replaced the 84-month agreement with the full pay NSIA. The NSIA allows a taxpayer to pay the balance owed before the collection statute expires, which is generally up to 120 months, unless the statute is extended,1 if the balance owed is for a current year.

Why are they simple?

Taxpayers who owe less than $250,000 and meet the terms and conditions of the programs can set up a payment plan in a phone call with the IRS. These plans require a lot less paperwork than installment agreements in which the taxpayer has to prove their “ability to pay.” Taxpayers do not have to file financial information with the IRS or prove their ability to pay. Also, taxpayers do not have to liquidate or borrow against assets.

There are two caveats to these plans:

  1. All required tax returns must be filed: At least the past 6 years need to be filed (if required) in order to enter into any installment agreement. See IRS Policy Statement 5-133.
  2. The number of months to pay may be limited: The number of months may be limited if the collection statute expiration date (CSED) is less than the months allowed for payment. For example, the SLIA is limited to 72-months or the CSED, whichever is shorter. If a taxpayer has an amount owed that is more than 4 years old, they should research their account and determine the CSED.

Here is a summary of these three simplified IRS payment plans:

Terms and Conditions

Guaranteed Installment Agreement (GIA) (36-month agreement)

Streamlined Installment Agreement (SLIA) (72-month agreement)

Full-pay non-streamlined installment agreement (Full pay NSIA)

Maximum payment terms

36 months (or before the expiration of the collection statute, whichever is earlier)

72 months (or before the expiration of the collection statute, whichever is earlier)

Before the collection statute expires (generally up to 120 months)

Maximum unpaid balance

Total tax owed is $10,000 or less (the taxpayer may owe additional amounts in penalty and accrued interest)

Assessed balance owed is $50,000 or less

Total balance owed up to $250,000

Financial disclosure required?

No

No

No

Automatic payments required?

No

Yes, if the balance owed is between $25,001-$50,000

No

IRS files Notice of Federal Tax Lien?

No (a lien determination is not required but may be made)

No (a lien determination is not required but may be made)

Yes2

Asset liquidation required

No

No

No

Other terms

No prior installment agreements in past five years

Can include amounts owed for other assessments, such as a trust fund recovery penalty assessment

Program started March, 2020

Other options

If taxpayers cannot meet the terms of these agreements or cannot pay the payment plan amount, they can utilize other payment terms based on their financial ability to pay. Ability to pay installment agreements requires taxpayers to provide financial information proving how much they can pay each month (“monthly disposable income” or MDI). Taxpayers who need an installment agreement based on their ability to pay may also need to liquidate or borrow against assets to pay down or satisfy their tax debt.

If the taxpayer has no MDI and is experiencing financial hardship, other options such as currently not collectible (temporary payment deferral) or an offer in compromise (a tax settlement with the IRS for less than the amount owed) may be more appropriate. For assistance creating a strategy to address your tax issue, visit Jackson Hewitt’s Tax Resolution Hub to see the various ways we can help you.

2 The IRS may request that a taxpayer extend the statute for a specific period. In addition, the statute is automatically extended in certain situations, including when a taxpayer requests a collection due process hearing, applies for an offer in compromise, or files for bankruptcy.

3 Some taxpayers who only owe less than $250,000 for the 2019 tax year may qualify to set up an Installment Agreement without the IRS filing a notice of federal tax lien.