If you owe the IRS $100,000 or less, you may qualify for a Streamlined Installment Agreement (SIA). These types of agreements are great when you don't want to provide verification of your assets, expenses, debts, or income to the IRS and you can afford to pay the debt in full withing the time-frame required for the SIA.
The SIA can be as long as 84 months… but how long they last will depend on how much debt you have, the CSED (what is the CSED?), and what you can pay per month.
If you can't afford an SIA, it may mean that you are a better candidate for a partial pay installment agreement, non-collectible status, an offer in compromise or possibly even a bankruptcy. (Visit our installment agreement page for more information).
SIAS AND TAX LIENS
If you owe the IRS $25,000 or less and set up an SIA, the IRS will withdraw a lien after 3 consecutive payments. If the debt is between $25000 and $50000 it won't, but it also won't record a lien notice if the SIA is set up and the payment is auto debited from an account. Debts between $50,000 and $100,000 will result in a lien notice filing even if you negotiate an SIA… unless you can prove that the lien notice recording will hamper the IRS' ability to collect the debt and your ability to “eat”.
STEPS TO TAKE
MAKE SURE ALL DELINQUENT TAX RETURNS HAVE BEEN FILED
All required returns need to be filed. This issue can be tricky when you have returns that are older than 6 years and un-filed however. Sometimes people file returns that are missing, but that didn't need to be filed.
VERIFY THE AMOUNT OF THE DEBT
It's important to know the total amount of the debt with penalty and interest that will accrue over the life of the plan, and if the debt with penalty and interest is close to either the $25,000 threshold or the $50,000 threshold, it will be important to know what the “assessed” balance is. The assessed balance is important because even if the overall debt is above $25,000 or $50,000, you may qualify for an SIA if this assessed balance is less.
An Example: If the overall debt is $30,000 0ver the life of the collection statute, but the assessed balance is $24,900, the IRS should allow you to set up an SIA based on the lifetime debt amount and agree to withdraw the lien after 3 consecutive payments out of your bank account.
VERIFY THE STATUTE PERIOD DATE OR CSED
This is important because if the IRS only has a short time to collect an old debt, the SIA period must be no longer than this time period.
An Example: Assume that you have 4 old tax debts. The oldest is from 2010 and it has 3 years remaining on the CSED and the total amount owed with penalty and interest is $40,000. The SIA won't work unless your payments are high enough to pay $40,000 over 3 years. This is true even if the other years have more time remaining on the CSED than the time allowed by the SIA.
If the above example fits your situation and you can't afford the SIA as a result, you'll have to look into using a partial pay agreement, an offer in compromise, or even bankruptcy.
MAKE SURE YOU HAVEN'T BEEN IN A PAYMENT PLAN FOR A WHILE BEFORE YOUR REQUEST
If you've been in a payment plan within 5 years of the request for an SIA, the IRS might deny your request.
CONTACT THE IRS AND CONFIRM
Call the IRS and confirm the amount of the overall debt, the assessed balance, the CSED for each year, and how much it calculates you'll need in order to make an SIA work.
Ask for some Account Transcripts to use to compare to your own calculations.
If the debt is between $25,000 and $50,000, the payment period should be 72 months. If between $50,000 and $100,000, the payment period should be 84 months. (or again…the CSED period if that date is shorter)
If you agree on the numbers and the CSED for each year, ask them to give you the amount needed to make an SIA work.
If you agree with the amount of debt and the amount of the payment, fill out a 433d form and provide it to them asap.
Debts up to $50,000 require automatic debit to avoid new lien notice filings. Debts between $50,000 and $100,000 require auto debited payment in order to have the SIA at all, but again, the lien notice will be recorded unless you challenge this another way.
MAKE PAYMENTS UNTIL THE IRS BEGINS WITHHOLDING THE FUNDS
Begin making payments online at IRS.gov on the first date the payment is due until you have confirmation that the IRS has attached your account and will begin pulling the payment from it.
DEAL WITH LIENS
If your assessed debt was below $25,000, and you've made 3 consecutive payments under the SIA, and you have a Lien Notice recorded with the County Recorder ask the IRS to “withdraw” the lien notice. There is a form for doing this.
If your assessed debt was below $50,000 and you have an SIA in place, make sure the IRS doesn't record any new lien notices.
If your assessed debt is above $50,000, and you've arranged an SIA, you are out of luck unless you can prove to the IRS that the Lien Notice filing is causing other problems.
WHAT IF IT WON'T WORK
If it's clear from the outset that the SIA won't work, or you've been struggling in an SIA or other payment plan for a while, it's probably time to speak with someone about all of your options. You may be able to settle the debt, use bankruptcy, or get on a better payment plan based on your actual financial situation.