How Long Does It Take? IRS Collection Agreement

When you owe the IRS, you can arrange to pay your tax bill in as little as 15 minutes, or it can take several months. The time it takes all depends on your situation, the type of agreement you need, and how you need to interact with the IRS.

You can quickly set up simple payment plans, such as extensions to pay and “streamlined” installment agreements. For more complicated agreements (like some payment plans, deferred payment, and tax debt settlement), you’ll need to provide your financial information to the IRS, which takes considerably longer.

Here’s what to expect for each of the IRS payment options:

Extension of time to pay

The IRS offers an extension of up to 120 days to pay your taxes.

Terms:

  • Good for any amount due.
  • You must agree to pay the full bill within 120 days.

Time to complete:

  • If you request an extension using the IRS’ online payment agreement tool, it takes about 15 minutes.
  • Requesting an extension by phone usually takes about an hour (after wait times).

When it may take more time:
If you have back tax returns, the IRS will need to process them before granting you an extension.

Simple payment plan

Simple payment plans (called guaranteed or streamlined installment agreements) are for tax bills of up to $50,000.

Terms:

  • You must pay within 6 years.
  • Generally, the IRS won’t file a tax lien.

Time to complete:

  • If you request an installment agreement using the IRS’ online payment agreement tool, it takes about 15 minutes.
  • Requesting by phone usually takes about an hour (after wait times).

When it may take more time:

  • If you’ve had an installment agreement before, you may need to set up the agreement by phone and/or give the IRS your financial information.
  • If you owe between $25,000 and $50,000, you’ll need to pay by direct debit or payroll deduction to avoid a lien filing. This process adds 4-6 weeks to the set-up time.

Payment plan for balances between $50,000 and $100,000

Terms:

  • You must pay within 84 months by direct debit or payroll deduction.
  • The IRS will file a tax lien.

Time to complete:
Setting up the payment by direct debit/payroll deduction takes 15-30 minutes for the initial agreement by phone, plus 4-6 weeks to finalize the direct debit setup.

When it may take more time:
If you can’t pay by direct debit or payroll deduction, add 1-2 months. The IRS will require financial information to complete payments by check.

Payment plan for tax bill of more than $100,000 OR currently not collectible status

If you’re setting up a payment plan for a balance of more than $100,000 or you can’t pay the balance in 84 months, working with the IRS will take time. So will requesting currently not collectible status, a temporary status for people in financial hardship until they can pay again.

Terms:

  • Payment terms are based on your documented financial situation.
  • The IRS generally files a tax lien if you owe more than $10,000.

Time to complete:

  • Requesting by phone is the quickest way to jumpstart these agreements, which can take months to complete. That’s because you’ll have to provide detailed financial information to the IRS.
  • Requesting by mail means the IRS will take 1-2 months to consider your information/request. Then, the IRS may request more information if your initial documentation isn’t sufficient.
  • Hint: Start this process by phone – and you may want a tax pro’s help setting up these types of agreements.

When it may take more time:
Incomplete responses will add more time, so you’ll want to make sure you’re providing everything the IRS asks for.

Offer in compromise (OIC)

An OIC is an agreement with the IRS to settle your tax debt for less than you owe.

Terms:
The IRS computes your settlement amount based on your assets and future ability to pay.

Time to complete:

  • Tax bills of less than $50,000 take 4-6 months.
  • Tax bills of more than $50,000 take 7-12 months.

Note: OICs must be finalized within 2 years after the IRS receives the OIC application (Form 656 with required information and payments).

When it may take more time:
If you appeal an IRS decision on your OIC, add 2-6 months.

Note: Local IRS collection agents move fast

Local IRS collection agents are called revenue officers. They’re usually assigned to the most urgent collection matters, such as business debt, large individual debts, and back tax returns with probable tax bills.

Revenue officers will often expect to resolve the issue quickly, and they can use liens and levies to quickly enforce a collection agreement.

Know your options

Learn more about all the options that may be available to you when you can’t pay your taxes.

Or, get a tax pro to figure out which payment agreement may be best for you, and even set up the agreement with the IRS for you. Learn more about H&R Block’s Tax Audit & Notice Services.

Get help from an expert

Your local H&R Block tax pro can look into your issue and deal with the IRS for you.

Schedule a Free Consultation

Or call 855-536-6504

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