An installment agreement (IA) is an arrangement between the IRS and a taxpayer to pay a tax liability in regular monthly payments when the taxpayer cannot pay in full immediately.
Types of installment agreements:
| Type | Eligibility | Key Features | |---|---|---| | Guaranteed IA | Individual, owe ≤$10,000, no prior IAs in last 5 years, fully compliant | IRS must accept; no financial statement required | | Streamlined IA | Individuals/businesses owe ≤$50,000 (individuals) or ≤$25,000 (businesses); pay within 72 months | No financial statement required; lien generally not filed | | Non-streamlined IA | Owe >$50,000 or need >72 months | Financial statement (Form 433-A or 433-B) required; IRS has full discretion | | PPIA (Partial Payment) | Pay less than the full balance; balance expires at end of collection statute | Like a slower OIC; require periodic review |
Application methods: Online payment agreement at IRS.gov, Form 9465, or phone.
Fees: $31 (low-income, direct debit), $107 (non-direct debit online), $178 (phone/mail/in-person).
During an installment agreement: - Penalties and interest continue to accrue on the unpaid balance. - Federal tax lien may be filed (especially for larger amounts). - Must remain compliant with all future filing and payment obligations.
Defaulting: If a payment is missed or a new tax liability arises, the IRS can terminate the IA and initiate collection action (levy).
> Exam tip: The guaranteed installment agreement (≤$10,000) and streamlined IA (≤$50,000, 72 months) are heavily tested on the EA exam. Know the financial statement requirements and when the IRS is required vs. permitted to accept.