Installment Agreements

When Full Payment Isn’t Possible

Not every taxpayer who owes the IRS can pay in full, and not every taxpayer qualifies for an Offer in Compromise. For many clients, an installment agreement represents the most practical path forward — allowing them to satisfy their tax obligation through manageable monthly payments while avoiding the severe consequences of enforced collection.

The IRS offers several types of installment agreements, and the one that best serves your interests depends on the amount owed, your financial capacity, and the nature of your assets. Selecting the wrong type — or agreeing to a payment amount that is unsustainable — can result in default, reinstatement of enforced collection, and loss of the protections the agreement provides.

Income, Expenses & Asset Analysis

For liabilities above certain thresholds, the IRS requires a full financial disclosure before it will agree to an installment plan. This involves completing Form 433-F or 433-A, which details all sources of income, monthly living expenses, bank account balances, real property, vehicles, investments, and other assets. The IRS uses this information to determine how much you can afford to pay each month.

The financial analysis is where professional representation makes the greatest difference. The IRS applies its own allowable living expense standards — national and local standards for housing, transportation, food, and other necessities — which may differ significantly from your actual expenses. We ensure that every allowable expense is properly documented and that the proposed payment amount reflects a realistic assessment of what you can sustain.

Protecting Secured Assets

One of the critical considerations in negotiating an installment agreement is protecting your secured assets — your home, vehicles, and business equipment. The IRS may calculate that you have equity in these assets that could be liquidated to pay the tax debt. Without proper representation, a taxpayer may be pressured into an agreement that effectively requires selling assets to make payments.

We advocate for payment terms that preserve our clients’ ability to maintain their household and business operations. This includes properly accounting for secured debt payments, demonstrating the necessity of retaining specific assets, and challenging IRS asset valuations when they do not reflect fair market conditions.

Allowable Expense Standards

The IRS uses Collection Financial Standards to determine what constitutes a necessary living expense. These standards set maximum allowable amounts for categories including food, clothing, personal care, housing, utilities, transportation, health care, and other necessities. Expenses that exceed these standards — or that the IRS considers discretionary — are generally disallowed when calculating your available income for payment.

However, the IRS also recognizes that individual circumstances may warrant deviations from these standards. Medical conditions, educational expenses for dependents, and certain professional obligations can justify higher allowable expenses. We present these circumstances with supporting documentation to negotiate payment amounts that our clients can realistically sustain over the life of the agreement.

Streamlined, Guaranteed & Partial Pay

The IRS offers several categories of installment agreements. Guaranteed agreements are available for liabilities under a certain threshold when the taxpayer meets specific criteria. Streamlined agreements allow taxpayers to set up payment plans without providing detailed financial statements, though the monthly payment must satisfy the liability within the collection period. For larger liabilities, a financial disclosure is required, and the IRS determines the payment amount based on its analysis.

In some cases, a Partial Pay Installment Agreement may be appropriate — this arrangement allows the taxpayer to make monthly payments that will not fully satisfy the liability before the collection statute expires. The IRS periodically reviews partial pay agreements to determine whether the taxpayer’s financial condition has improved. We help clients understand the long-term implications of each type and select the arrangement that provides the greatest protection and flexibility.