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IRS Installment Agreements: Form 9465 & More

An IRS Installment Agreement (IA) is when you repay tax debt in regular monthly payments. Most Installment Agreements must be completed within seven years or by the Collection Statute Expiration Date (CSED). That’s the day your tax debt expires.

You can apply for Installment Agreements online (for debts up to $50k) or by using Form 9465. Alternatively, you can have a licensed tax professional negotiate one on your behalf over the phone with the IRS.

IRS Installment Agreement Request: When & What Type

If you cannot afford to pay your taxes in full, an Installment Agreement may be the best option.

However, for an installment plan to work, you need to be able to afford the payments every month. If you don’t have any disposable income, you may want to pursue other options such as establishing yourself as uncollectible.

If you can get a loan with a low-interest rate, you may want to consider that instead of an installment plan. When you are on an installment plan, interest and penalties continue to accrue on your tax debt. The interest rate updates quarterly, but the late-payment penalty is only 0.25%.

On IRS Installment Agreements, interest compounds daily, and the effective annual rate can range from 6% to 12%. As a result, sometimes taking out a loan, and repaying the lender can save you money compared to making payments to the IRS.

If taking out a loan is not an option, here’s a look at the main types of Installment Agreements for people with IRS tax debt.

Guaranteed Installment Agreement

It is the easiest of the installment agreements to obtain.  This installment agreement is “guaranteed” as long as you meet the requirements set forth by the IRS.  You must owe $10,000 or less in taxes, and you must pay off the debt within three years or before the collection statute expiration date (CSED).

Direct Debit Installment Agreement Details & Benefits

A direct debit installment agreement (DDIA) is just an installment agreement where the taxpayer makes monthly payments via direct debit. That means payments are withdrawn directly from your bank account. In some cases, this type of payment method is one of two payment options required with a 60-month plan to have a tax lien withdrawn. Furthermore, direct debit or a payroll deduction used to be required when you owe more than $50,000. However, in practical settings, the IRS may not require financial disclosure for tax balances over $50,000 but less than $100,000 as long as the taxpayer can pay off the debt before the collection statute expiration date (CSED) on collections for a particular tax period. If the taxpayer cannot pay it off by the CSED, then the IRS will require financial disclosure in most cases.

Streamlined Installment Agreements

If you are an individual who owes $100,000 or less or a business that owes $25,000 or less (up to $100k for out of business sole-proprietors), the IRS may grant you a Streamlined Installment Agreement. This plan does not require the verification of financial assets, liabilities, expenses, and income. In some cases, the IRS requires financial disclosure if the taxpayer has a balance that’s over $50,000.  However, if you owe over $100,000, the IRS may likely still request a collection information statement (form 433).  Individuals can get long payment terms (CSEDs permitting) and active businesses generally get up to two years to pay off their balances, CSEDs permitting.

Financially Verified Installment Agreement

Verified Financial Installment Agreements are for individuals or businesses who owe too much tax to qualify for a streamlined agreement.  In other words, this type of installment agreement requires the disclosure of financials through a collection information statement (form 433).  It also may apply to individuals who owe greater than $100,000. There is more effort and generally paperwork involved with this type of agreement. You need to provide comprehensive information about your assets, liabilities, income, and expenses to the IRS.

Partial Payment Installment Agreement (PPIA)

If you cannot afford the monthly payments on a regular installment agreement, you may want to apply for a PPIA.  This type of IRS installment agreement allows you to make monthly payments you can afford. Since you are paying less than what the IRS wants on a regular installment agreement, you end up paying less than you owe. As a result, it is more difficult for the taxpayer to obtain this Installment Agreement.  You have to submit a lot of financial information to the IRS for the agency to consider and prove you cannot make regular monthly payments.

Appealing an IRS Installment Agreement

If the IRS rejects your Installment Agreement, you can appeal. You can also appeal if the IRS terminates an existing agreement. Here’s a look at that process.

IRS Form 9465: Installment Agreement Request Instructions

If you don’t want to use the IRS’s online tool to request a payment plan (or you owe too much money to use the online tool), you can use IRS Form 9465 (Installment Agreement Form). This form is mainly for individuals. Businesses can use this form if they are out of business. Details on who needs to use this form, when it is necessary, fees, and instructions on completing the document.

Frequently Asked Questions About Installment Agreements

Common questions and answers about IRS Installment Agreements.


This article is not legal or tax advice. It should not be used as a substitute for the advice of a competent attorney or a licensed tax professional authorized to practice in your jurisdiction.