The IRS has raised eligibility thresholds for obtaining an installment agreement.
1) The total tax due has been raised from $25,000 to $50,000.
2) Taxpayers must prove ability to repay their debt in full with penalties & interest within 72 months - vs. the previous term of 60 months.
Taxpayers must be able to remain current on new taxes in addition to making installment payments. (In some cases the taxpayer must prove to the IRS they have this ability in order to be granted an installment agreement.) Taxpayers who either owe more than $50k or don’t have the ability to pay within 72 months while also paying current year taxes must engage in the much more tedious process of seeking an offer in compromise. This can take years to accomplish.
Remaining current on an installment agreement will prevent the IRS from levying your wages, 1099 income, bank account, etc. However, penalties and interest are not abated or reduced by an installment agreement so if you have any other source of funds with which to pay your taxes (family loan, credit card low interest advance, home equity, sell things...) that will probably be a less costly option. Keep in mind the IRS may still secure its debt with a notice of federal tax lien until you are paid in full, even with an installment agreement in place.
An installment agreement can be requested on line here:
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