Non-Streamlined Installment Agreements
Guide to an IRS Payment Plan for Tax Debt Over $50,000
Non-Streamlined Installment Agreements
Monthly Payment Plans for Taxpayers Who Owe $50,000
If you can’t afford to pay your taxes in full, you may be able to set up a monthly payment plan with the IRS. The agency has different options depending on how much you owe, your budget, and other factors. If you owe over $50,0000 in assessed tax, the most common option is a non-streamline installment agreement.
To help you decide if you want to pursue this type of installment agreement, this guide explains the requirements and how to apply. Want to talk about your options with a tax attorney? Then, contact us at the W Tax Group today.
What Is a Non-Streamline Installment Agreement (NSIA)?
This is an IRS installment agreement for individuals who owe $50,000 or more in assessed tax (not including penalties and interest). The IRS will file a notice of federal tax lien against you, until you complete the payments, but you can make payments up to the date of the Collection Statute Expiration Date (CSED). That means you can take up to 10 years to pay if you set up the payment plan when you file your tax return.
Requirements for a Non-Streamline Installment Agreement
To qualify for a non-streamline installment agreement, you must meet the following requirements:
- Owe over $50,0000 in assessed taxes, not counting penalties and interest.
- Agree to make monthly payments that cover the balance due plus interest and penalties by the collection statute expiration date (CSED).
- Be compliant with the last six years of filing and payment obligations. If you have outstanding returns, file them all before you apply for this program.
- Complete Form 9465 or call the IRS with the information from that form.
- File a collection information statement if requested by the IRS. This only applies in certain situations as explained below.
If you meet the above requirements, the IRS is highly likely to approve your payment plan. Generally, the IRS will only deny your plan if you have a history of default or if you are required to complete a collection information statement and the revenue officer believes that you have enough cash or assets to pay the balance in full.
How to Apply
To apply, you should call the IRS directly. You will need to provide the information from Form 9465 over the phone. Alternatively, you can fill out this form by hand and mail it in, but that takes a lot longer.
What If the IRS Approves Your Installment Agreement
If the IRS approves your request for a non-streamline installment agreement, you must make payments on time every month. You can mail them in or make them online, but to ensure you don’t forget, you may want to set up direct debits.
The IRS can put your plan into default if you miss a monthly payment, but usually, the agency gives you a chance to catch up if you miss one payment. However, if you continue to miss payments, the agency will send CP523 (Termination of Installment Agreement) or a similar notice.
Note that the IRS will issue a notice of federal tax lien (NFTL) when you’re on an installment agreement. This attaches to all current and future assets — if you sell assets while an NFTL is in place, the proceeds (up to the amount of your tax debt) will go to the IRS. You also won’t be able to borrow against any assets unless the IRS agrees to a lien subordination.
What if the IRS Denies Your Payment Plan
The IRS will notify you by mail if the agency denies your payment plan. At that point, the tax bill is due in full, but you can still contact the IRS to make other arrangements. If you like, you can appeal the denial. This allows you to present new information and explain why you should be approved for a payment plan.
Other IRS Payment Plan Options
A non-streamline installment agreement is not the only option. Here are the other IRS installment agreements:
- Short-term — Provides up to 180 days to pay for people who owe less than $100,000 in combined interest, tax, and penalties.
- Guaranteed — Provides up to three years to pay for people who owe less than $10,000 in assessed tax.
- Streamline — Provides up to seven years to pay for people who owe up to $25,000 in assessed tax.
- Streamline direct debit installment agreement — Provides up to seven years to people for people who owe $25,0001 to $50,000 and either set up direct debit payments or file a collection information statement.
- In-business trust fund express installment agreement — Provides up to two years for in-operation businesses that owe $25,000 or less in assessed tax.
You may also hear the phrase financially verified installment agreement. That refers to a streamline or non-streamline installment agreement where you complete a collection information statement to verify your financial condition.
Non-Streamline Vs. Streamline
Wondering about the differences between a streamline and non-streamline agreement? Then, check out this table for an overview.
| Streamline | Non-Streamline | |
|---|---|---|
| Time to Pay | Up to seven years | Up to 10 years |
| Amount of tax debt | Up to $50,000 | $50,000 and over |
| Notice of Federal Tax Lien | Not usually | Always |
| Financial Disclosure | Not required | May be required |
| Direct debit | Required on balances over $25,000 unless you provide a collection information statement. | Usually required. |
Usually, your level of debt determines the agreement you can get, but if you are on the borderline, you can make a downpayment (before you apply) to move from the non-streamline to the streamline category if desired.
The main advantage of being on a streamline agreement is that the IRS generally won’t file a federal tax lien against you. However, the benefit of a non-streamline agreement is that you can make payments up to the collection statute expiration date. Depending on when you apply relative to you filed your tax return, this can potentially give you up to three extra years to make payments.
Settlements Vs. Payment Plans
With a monthly payment plan (installment agreement), you pay off the full tax liability. However, there are programs that allow you to settle your tax debt for less than you owe. These programs are not necessarily easy to qualify for — in fact, about half of people who apply for an offer in compromise get denied.
But that said, an independent review of installment agreement applications indicates that over a quarter of people who set up installment plans may have qualified for a partial payment installment plan. To ensure you select the best program for your situation, consult with a tax professional. Here are more details on the settlement options:
- Offer in compromise — You make a lump sum payment or 24 installments, and the IRS wipes out the rest of your tax debt.
- Partial payment installment agreements — You make payments that you can afford until the collection statute expiration date, and then, the IRS settles the remaining part of the debt.
You can also use penalty abatement to reduce your balance. Then, you can set up a payment plan or a settlement agreement.
Frequently Asked Questions (FAQs)
Here are answers to some of the questions we hear the most about installment agreements. If you don’t see your question, contact us directly for answers.
Does the IRS file a federal tax lien against you when you set up payments on your tax debt?
The IRS will file a federal tax lien if you set up payments on over $50,000 in tax debt through a non-streamline-installment agreement. If you owe less than that amount and the IRS has already issued a tax lien, you may be able to get it removed when you set up a payment plan.
Do you have to file a collection information statement to set up a payment plan?
If you owe over $50,000, you only have to file a collection information statement in the following situations: 1) a revenue officer is assigned to your account, 2) you owe more than $250,000, 3) you have a history of non-compliance, 4) there is a wage garnishment or levy against you, or 5) the IRS has certified your tax debt as seriously delinquent to the State Department.
Can you set up payments if you haven’t filed back taxes?
You cannot set up an installment agreement unless you are compliant with the last six years of filing. You will need to file all back taxes or prove that you weren’t required to file so that you can set up a payment plan.
Can you set up payments on a tax debt from a substitute for return?
If the IRS has assessed tax against you with a substitute for return, that meets your compliance requirement. In other words, you can set up payments for that assessed balance. However, if the balance is higher than it should be, you should file a new tax return.
Get Help Applying for a Non-Streamline Installment Agreement
Do you owe back taxes? Looking for a resolution option? Then, you should contact us today. We’ll help you decide if an NSIA is right for your situation, and if not, we’ll help you explore other options. At the W Tax Group, tax debt resolution is our main focus, and we leverage our experience to help our clients get the best outcome possible.
