How to Create a Plan To Pay Your IRS Debt

The IRS wants to make it as easy as possible for you to pay your taxes even if you are struggling to pay it in full on the due date. The agency, for example, increased the threshold amount you have to owe them before the agency files a Notice of Federal Tax lien.

File your tax return in time and pay as much as you can. Then consider the options.

Now consider your options:


If you qualify, it might be in your best interest to get a loan for the amount outstanding.

  • Interest on a bank loan will usually be lower than penalties and interest charged by the IRS.
  • Consider a loan against your assets or even selling some assets to raise enough to pay the IRS in full.

Streamlined Processing of Installments Agreements

The IRS is continuously expanding its criteria for streamlined processing of taxpayer requests for installment agreements.

Online Payment Agreement

Do you owe $50,000 or less, you can apply for an installment agreement. 

IssueCurrent CriteriaStreamlined Test Criteria
Payment Terms72 Months or the number of months needed to pay in full before the Collection Statutory Expiration DateUnchanged
Collection Information StatementIf you previously defaulted on an assessed balance of $25,001-$50,000 you have to prove your ability to payNo verification of ability to pay required any longer
Payment MethodDirect Debit Payment or Payroll Deduction requiredDirect Debit Payment or Payroll Deduction preferred but not required
Notice of Federal Tax Lien  
Up to $25,000Determination is not requiredNo Change
$25,000-$50,000Determination is not requiredDetermination is not required with the use of direct debit or payroll deduction agreement
 The use of the direct debit or payroll deduction agreement is mandatory in order to qualify for streamlined IAWithout the use of the direct debit payroll deduction agreement the taxpayer still qualifies for IA, but a Notice of Federal Tax Lien determination will be made.

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Do you owe a balance of tax, penalty, and interest of between $50,000 and $100,000?

  • If you do, you may experience accelerated processing of your installment agreement request.
  • To qualify your proposed monthly payment must be the greater of your assessed balance divided by 84, OR the amount required to pay your full debt by the Collection Statute Expiration Date.
IssueCurrent CriteriaStreamlined Test Criteria
Payment TermsNoneUp to 84 months or the number of months required to pay the full amount before the Collection Statute Expiration Date
Collection Information StatementNone


If the taxpayer agrees to make payments by direct debit or payroll deduction no verification of ability to pay is required.
Payment MethodNoneDirect Debit Payment or Payroll Deduction preferred but not required
Notice of Federal Tax LienNoneDetermination is required
Out of business sole-proprietorship debtsNoneApplies
Operating businesses with a trust fund tax liabilityNoneNone
At the moment 90% of taxpayers qualify to use the IRS’s Online Payment Agreement application.  The IRS strongly encourages its use and the selection of the Direct Debit Method of Payment.

IRS Debt Resolution

Offer in Compromise

Agreeing with the IRS to settle your tax debt for less than the full amount should always be an option if you experience an economic calamity or are broke.

  • The IRS will consider it if what you offer is determined to be the most the agency can realistically collect within a specified time-frame.
  • You can test your eligibility at Offer in Compromise Pre-Qualifier tool

Readers should note that this article is only intended to convey general information on these issues and that FAS CPA & Consultants (FAS) in no way intends for the contents of this article to be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services.  This article cannot serve as a substitute for such professional services or advice.  Any decision or action that may affect the reader’s business should not rely solely on the contents of this article, but should rather be consulted on with a qualified professional adviser. FAS shall not be responsible for any loss sustained by any person who relies on this presentation.  This article is subject to change at any time and for any reason.

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Fulton Abraham Sanchez, CPA

Fulton Abraham Sánchez, CPA is a Certified Public Accountant, specialized In Tax Planning, International Business, Wealth Management and Offshore Banking. You can email him to fa@fascpaconsultants.com or follow us on Facebook : FAS CPA & Consultants.

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