Types of Installment Agreements
- Guaranteed Installment Agreement — available to taxpayers owing $10,000 or less who can pay within 3 years; no financial review required
- Streamlined Installment Agreement — for balances up to $50,000 (individuals) or $25,000 (businesses), payable within 72 months; no detailed financial disclosure required
- Non-Streamlined Agreement — for larger balances; requires full financial disclosure on Form 433-A or 433-F
- Partial Pay Installment Agreement (PPIA) — monthly payments less than the full balance; the IRS agrees to accept less, though it requires financial review and is periodically reassessed
Costs and Consequences
The IRS charges a setup fee for installment agreements ($31–$225 depending on how the agreement is established). Interest (currently 8%) and the failure-to-pay penalty (0.25% per month while in an active agreement) continue to accrue. A Notice of Federal Tax Lien may still be filed for balances above $10,000.
Installment Agreement vs. Offer in Compromise
An installment agreement pays the full balance over time; an Offer in Compromise settles for less than the full balance. Which is appropriate depends on your ability to pay and the total balance owed.
Disclaimer: This glossary entry is for general educational purposes only and does not constitute legal or tax advice. Laws change frequently and vary by individual circumstances. Consult a licensed California attorney or CPA for guidance on your specific situation.