The 3 most common IRS payment plans

The simplest long-term IRS payment plans to set up are:

• The 36-month payment plan, called a guaranteed installment agreement (GIA)
• The 72-month payment plan, called a streamlined installment agreement (SLIA)
• The full-pay non-streamlined installment agreement (NSIA)

A note on the NSIA: As of March 2020, the IRS replaced its 84-month agreement with the full-pay NSIA. The NSIA allows you to pay your tax bill before the collection statute of limitations expires, which is generally up to 120 months (10 years), unless the statute is extended.

Why they are simple

If you owe less than $250,000 and meet the terms and conditions of the programs, you can set up one of these agreements with a phone call to the IRS.

These plans require a lot less paperwork than installment agreements that require you to send documents proving your ability to pay. For these simple agreements, you don’t have to file financial information with the IRS or prove your ability to pay. You also won’t have to sell off or borrow against your assets.

There are two caveats to these plans

• You need to file all your required tax returns.  Generally, this means that you have filed for at least the past 6 years to set up any installment agreement.
• You may have a limited number of months to pay if the time left on your collection statute is less than the time the agreement allows for. For example, you get up to 72 months to pay your tax bill in a SLIA--or the collection statute expiration date--whichever is shorter. If your tax bill is more than 4 years old, you should research your account to find out when your collection statute expires.

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

* Some taxpayers who owe less than $250,000 for the 2019 tax year only may qualify to set up an installment agreement without a federal tax lien.

Other options

If you can’t meet the terms of these agreements or can’t pay the payment plan amount, there are other options based on your financial situation. To set up one of these ability-to-pay installment agreements, you would need to provide financial information proving how much you can pay each month (called monthly disposable income). You may also need to sell or borrow against your assets to pay down or pay off your tax debt.

If you have no monthly disposable income and you’re experiencing financial hardship, there are other options, such as currently not collectible status (temporary payment deferral) or an offer in compromise (a tax settlement with the IRS for less than the amount you owe).

For help addressing 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, has 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. 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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