Setting Up an IRS Payment Plan for Over $100,000

An IRS payment plan, formally known as an Installment Agreement, provides a structured method for taxpayers to settle a tax debt over an extended period. For a liability greater than $100,000, the procedures are more rigorous than for smaller balances and involve a greater level of financial disclosure and direct engagement with the agency.

Eligibility for a Large-Balance Payment Plan

Before the IRS will consider a payment plan, a taxpayer must meet foundational eligibility criteria. For individual tax debts up to $250,000, the IRS offers a non-streamlined installment agreement, but for debts exceeding this amount, the process involves a more manual review by IRS personnel.

A primary requirement is being in full tax compliance, meaning all previously required tax returns must be filed. The agency will not negotiate a payment arrangement if there are outstanding, unfiled returns.

A taxpayer must also be current with their obligations for the present tax year. For employees, this means having adequate withholding from their wages, while self-employed individuals must make timely estimated tax payments.

The IRS must be able to collect the full amount of the tax debt within the time remaining on the Collection Statute Expiration Date (CSED), which is ten years from the date the tax was assessed. If a proposed payment plan does not satisfy the debt before this deadline, the IRS may reject it. Requesting an installment agreement can pause the CSED clock while the request is pending.

Required Financial Disclosures and Documentation

When a detailed financial disclosure is required to analyze a taxpayer’s ability to pay, the central document is the Collection Information Statement (CIS), such as Form 433-F. This form requires a thorough accounting of all assets, income, and expenses.

Assets that must be disclosed include:

• Bank account balances
• Investment and retirement accounts
• Real estate
• Other significant property

The form also requires a complete picture of monthly income offset by living expenses. The IRS uses national and local standards to determine allowable amounts for necessities, and the difference between income and these expenses helps determine the monthly payment. To verify the figures on the CIS, taxpayers must provide supporting documents like recent pay stubs, bank statements, and proof of expenses.

The Application and Negotiation Process

The application process for individual tax debts up to $250,000 is initiated by calling the IRS Collection department directly. During the call, an IRS representative will verify the taxpayer’s identity and the total amount owed.

The IRS will then determine the minimum monthly payment required to satisfy the debt before the collection statute expires. If the taxpayer agrees to this payment amount, the installment agreement can be set up during the same phone call without a full financial disclosure.

If the taxpayer cannot afford the proposed minimum payment, the IRS will require a full financial review. This involves submitting a Collection Information Statement (Form 433-F) and supporting documents. The case is then assigned for a detailed analysis to determine an affordable payment amount, a step that is standard for debts over $250,000.

Key Considerations for Large-Balance Agreements

Entering into an installment agreement for a tax debt over $100,000 carries ongoing responsibilities. One of the most immediate is the filing of a Notice of Federal Tax Lien (NFTL). For debts of this magnitude, the IRS files an NFTL, which is a public document establishing the government’s legal claim to a taxpayer’s property. This lien can negatively impact credit scores and make it difficult to sell assets or obtain new loans, and it stays in place until the liability is paid in full.

A condition of any installment agreement is maintaining compliance with all future tax obligations. This means filing all subsequent tax returns on time and paying any new tax liabilities in full and on time. Missing a monthly installment payment or failing to meet new tax obligations constitutes a default on the agreement, which allows the IRS to terminate it and resume collection actions like levying bank accounts or garnishing wages.

The IRS also reserves the right to conduct periodic financial reviews. The agency can request an updated Collection Information Statement every two years to re-evaluate a taxpayer’s financial situation. If the review shows that the taxpayer’s income has increased or their allowable expenses have decreased, the IRS can demand an increase in the monthly payment amount.