IRS Definition of Installment Agreement:
If you’re financially unable to pay your tax debt immediately, you can make monthly payments through an installment agreement.
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There are several types of IRS payment plans, called installment agreements, that you can set up if you can’t pay your taxes. If you enter into an installment agreement, it will cut your failure to pay penalty in half. However, the does charge a fee to set up an installment agreement.
Some installment agreements are simple payment arrangements that you or your tax pro can set up using the IRS Online Payment Agreement tool. Others are more complicated to request and can involve sending the IRS proof of your income and assets. In these cases, the IRS can limit your expenses to a “reasonable” amount when it’s calculating how much you can afford to pay every month.
The best type of installment agreement for your situation depends on the amount you owe, how fast you can pay it, and your financial circumstances. Find out which IRS installment agreement is best for you.
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