Tax Payment Plan

A payment plan is the most common type of resolution for tax liability. Although there are different rules and regulations for each taxing authority, the IRS and all 50 states offer some version of one.

What is a Tax Payment Plan?

A tax payment plan is an agreement to pay your tax liability in installments over a set period of time. It is also commonly referred to as an Installment Agreement, and it allows individuals and businesses who are unable to immediately resolve all their outstanding tax to still make full payment in smaller, more manageable amounts over time.

To be eligible for a tax payment plan, all required returns must be filed, and any required deposits must be made timely. Please note that not all individuals and businesses have a tax deposit requirement; Omni can help you determine if this is a requirement for you. IRS Installment Agreements generally require equal monthly payments, and the payment amount will be based on the amount of taxes owed and on the taxpayer’s ability to pay that amount within the time legally available for the taxing authority to collect. Depending on the amount of tax liability and your ability to pay, you may need to submit a financial statement to qualify for an Installment Agreement.

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What-is-a-Tax-Payment-Plan
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How-do-I-set-up-an-Installment-Agreement-with-the-IRS

How do I set up an Installment Agreement with the IRS?

If you are an individual who owes $50,000 or less to the IRS, there are two different plans available to be set up without providing financial information. Unless you can full-pay the amount owed within 180 days, there are fees associated with setting up an Installment Agreement.

If you owe more than $50,000 in individual tax liability, owe business tax liability, or are having a hard time setting up the tax payment plan yourself, call us at (855) 529-3214.

Individual Installment Agreement (IA) Comparison

 Guaranteed IAStreamlined IA
Maximum Amount of Tax Liability$10,000, excluding penalties & interest$50,000, including penalties & interest
Tax Type AllowedIncome tax (Form 1040)All individual tax types
Tax Compliance Condition
  • Has no missing tax returns
  • Has timely filed and paid all Form 1040 returns for the previous 5 taxable years
  • Must timely file and full-pay all future tax returns
  • Has no missing tax returns
  • Must timely file and full-pay all future tax returns
Other Important FactsHas not entered into an IA in the previous 5 taxable yearsIf you have defaulted an IA in the past, a financial statement may be required
Payment Terms
  • 36 months, or before the collection statute has expired (whichever comes first)
  • Can be paid manually or by automatic debit
  • 72 months, or before the collection statute has expired (whichever comes first)
  • Must be paid using automatic debit (i.e. payroll or bank deduction)
Tax Lien FilingNot required but can be filed at the IRS’ discretionNot required but can be filed at the IRS’ discretion
Set-up Options

FAQ

If you owe individual income tax to the IRS, you can see the above table for the types of payment plan you can qualify for. If you owe any other tax type or amount that do not meet the requirement above, you may have to provide a Collection Information Statement, proof of income and expenses, and a formal written proposal for the payment plan.

No, unfortunately every state taxing authority has different criteria and procedure on the type of payment plan they offer. Most of them have different thresholds that could be based on the tax type, tax amount, and type of taxpayer entity before they can make a final determination. They often will ask for financial information, proof of income and expense, and a formal written proposal for the payment plan.

No, the only way to stop most penalties and interest from continuing is by full paying the tax liability.