How to Get an IRS Streamlined Installment Agreement

An IRS Streamlined Installment Agreement is a specific type of payment plan designed for taxpayers who owe a combined total of tax, penalties, and interest to the Internal Revenue Service. This arrangement allows individuals and some out-of-business sole proprietors to pay their tax debt over time in monthly installments rather than in a single lump sum. It is intended to simplify the process for obtaining a payment plan for those who fall within certain financial thresholds, often without requiring extensive financial documentation.

Eligibility Requirements for a Streamlined Agreement

To qualify for a streamlined installment agreement, a taxpayer must meet specific criteria. The primary requirement relates to the total amount owed; the combined tax, penalties, and interest must be $50,000 or less. For businesses, a separate threshold exists where the assessed tax liability must be $25,000 or less to qualify.

A taxpayer must have filed all legally required tax returns, as the IRS will not approve a payment plan for an individual or business that is not current on their filing obligations. The agreement also stipulates a maximum repayment period. Generally, the balance must be paid in full within 72 months, or six years. The proposed monthly payment must be sufficient to pay off the total liability within this 72-month window or before the Collection Statute Expiration Date (CSED), which is 10 years from the date the tax was assessed.

Preparing Your Application

Before initiating a request, gathering the necessary information is a foundational step. You will need your personal identification details, such as your name as it appears on your tax returns and your Social Security Number or Individual Taxpayer Identification Number. It is also helpful to have a copy of the most recent IRS notice you received, as it will contain your current balance owed and a notice number.

For those planning to make payments via direct debit from a bank account, having the bank’s routing number and your account number is necessary. This is a common requirement for taxpayers who owe between $25,000 and $50,000, as the IRS often mandates direct debit for these agreements. The primary document for a mail-in request is Form 9465, Installment Agreement Request. When completing the form, you will enter your personal information, the total tax liability you owe, and the amount of the monthly payment you propose to make.

How to Submit Your Request

Once your information is gathered, you can submit your request. There are two primary methods for submission: using the IRS’s online platform or mailing a paper form. The most direct way to apply is through the IRS Online Payment Agreement (OPA) tool, accessible on the IRS website. To begin, you will need to log in to an existing IRS online account or create a new one, which involves an identity verification process with ID.me.

After logging in, you will be guided through a series of prompts to enter your tax information, and the system provides immediate notification regarding the approval of your agreement. Alternatively, you can submit a request by mail using Form 9465. After you have completed and signed the form, it must be mailed to the correct IRS service center. The instructions for Form 9465 provide a list of addresses to ensure your application is sent to the proper facility.

Managing an Approved Agreement

Upon approval of a streamlined installment agreement, certain responsibilities must be met to keep the plan in good standing. The IRS charges a one-time setup fee, which is added to your total balance. The fee amount varies depending on the application method and payment type; for example, applying online and agreeing to direct debit payments typically results in the lowest fee, which can be as low as $31. This fee may be waived or reduced for low-income taxpayers who meet specific federal poverty level guidelines.

Making timely monthly payments is fundamental to maintaining the agreement. Failure to make a payment by the due date can lead to default. In addition to the agreed-upon monthly installments, you must remain current on all future tax obligations. This includes filing all subsequent tax returns on time and paying any new tax liabilities in full by their respective deadlines. Accruing new tax debt while under an existing installment plan is a common reason for default.

If you default on the agreement, the IRS can terminate the plan and resume collection activities. You will typically receive a notice, such as a CP523, informing you of the intent to terminate and providing a window of time to rectify the issue. If the default is not cured, the IRS may proceed with actions such as filing a federal tax lien or issuing a levy against your wages or bank accounts. Reinstating a defaulted agreement is possible but may require paying a fee and meeting additional requirements.