IRS installment agreements: guaranteed, simple, non-simple and partial pay

The agreement types

IRC 6159(a) lets the IRS enter into a written agreement for payment in installments “if the Secretary determines that such agreement will facilitate full or partial collection of such liability.” IRM 5.14.1.4 adds: “There are no minimum or maximum dollar limits for the amount of a liability that may be included in an IA.” The July 2026 IRM revisions replaced the old streamlined and in-business express agreements with simple payment plans, so the current menu is:

Qualifying matters because the simple and guaranteed types are close to automatic. IRM 5.14.1.2 says that if taxpayers qualify for a guaranteed agreement or a simple payment plan and request it, “the request will be granted even if the taxpayers could pay the liability in full.” See simple payment plans for the details, including paying the balance down to $50,000 to qualify, and partial payment agreements for PPIAs.

Agreements can be paid by direct debit (DDIA), payroll deduction (Form 2159), or regular payments. IRM 5.14.1.2 notes that a DDIA “generally takes more than 30 days from approval before the first payment is debited,” so an interim voluntary payment is often worth making.

When a request is pending, and why it matters

A pending request triggers the levy bar under IRC 6331(k)(2) and suspends the collection statute. IRM 5.14.1.5 lists the protected periods: while a request is pending, while the agreement is in effect, for 30 days after a rejection, for 30 days after a termination, and while a timely appeal is pending. The IRS codes a pending request on IDRS with TC 971 AC 043 and an approved agreement with TC 971 AC 063, within 24 hours of the request per IRM 5.14.1.3.

Not every request is pending. IRM 5.14.1.3(5) requires all of the following:

A request is not pending if it is made solely to delay collection, if the taxpayer is pursuing another resolution such as an offer or CNC, or if the taxpayer is in bankruptcy. A request can be pending even while estimated tax payments or deposits are behind, but IRM 5.14.1.3 is clear that “No IA may be approved until current payment compliance is achieved.”

Compliance and financial analysis

IRM 5.14.1.1.1 requires filing and payment compliance before any agreement: individuals must file all required returns and be current on estimated tax or withholding; businesses with employees must file all returns and be current on federal tax deposits. Revenue officers “must also determine whether the request is made solely to delay collection action and whether the agreement protects the government’s interest.”

For a non-simple agreement, the payment is based on the collection information statement and the Collection Financial Standards. Two IRM rules soften the standards for individuals:

• Six-year rule. If the liability, including projected accruals, can be paid within six years and within the CSED, all reasonable expenses may be allowed without substantiation (IRM 5.14.1.4.1). An agreement under this rule is still an NSIA, so “a complete financial analysis must be done prior to establishing the IA” and equity must be addressed.
• One-year rule. A taxpayer who cannot pay within six years may be given up to one year to modify or eliminate excessive necessary expenses.

Neither rule applies to corporations, partnerships, LLCs that are themselves liable, business expenses, or BMF liabilities of in-business sole proprietors. Where there is equity in assets, the revenue officer will ask the taxpayer to borrow against or sell it before granting an agreement, unless that would create economic hardship or the taxpayer qualifies for a guaranteed or simple plan (IRM 5.14.1.4).

The courts back the IRS on both compliance and documentation. In Orum v. Commissioner, 123 T.C. 1 (2004), aff'd 412 F.3d 819 (7th Cir. 2005), the taxpayers had defaulted a $5,000-a-month agreement, were behind on estimated tax for the following years, and did not supply the bank statements and business cash-flow data the settlement officer asked for by the deadline she set. The Tax Court held the rejection of a new agreement in the CDP hearing was not an abuse of discretion, noting that “Installment agreements are based upon the taxpayer’s current financial condition”, and the Seventh Circuit affirmed, calling the determination a reasoned decision supported by “not only the collapse of the previous installment plan but also the Orums’ failure to supply information and keep current on new taxes.” The practical rule for a representative: bring the estimated tax payments current and answer every document request by the stated date, because a court will not second-guess a rejection built on either failure. For how the courts treat disputed expenses in a partial payment agreement, see PPIAs.

User fees for 2026

User fees are set in 26 CFR 300.1 and capped by IRC 6159(f) at the amount in effect on February 9, 2018. IRM 5.14.1.2 (rev. 07-20-2026) lists the rates effective July 5, 2026, and the IRS payment plan page (updated March 3, 2026) shows the same online and offline amounts:

Low-income means adjusted gross income at or below 250 percent of the federal poverty guidelines; a taxpayer the IRS did not flag can file Form 13844 within 30 days of the acceptance letter. IRM 5.14.1.2 also notes: “Advise taxpayers that the IA user fee is due with the first payment in the amount of the agreed upon monthly payment or the IA fee, whichever is greater.” The Form 9465 instructions (Rev. July 2024) still show a $22 online DDIA fee; that figure predates the July 5, 2026 change.

Penalties, interest and liens

Interest and the failure-to-pay penalty continue. For individuals who filed timely, the failure-to-pay rate drops from 0.5 to 0.25 percent per month while an agreement is in effect, unless a final notice of intent to levy had already raised the rate to 1 percent (IRM 5.14.1.2; IRC 6651(h)). IRM 5.14.1.2 also states: “Payments on the balance are applied to the tax first, then any penalty, then interest.” See the failure-to-pay penalty and the penalty and interest calculator.

A Notice of Federal Tax Lien determination is generally required for accounts that do not qualify for guaranteed or simple processing (IRM 5.14.1.4.3). NFTLs may be filed while a request is pending, when it is granted, during rejection, and during default; filing while an agreement is in effect requires group manager approval and exigent circumstances. See federal tax liens.

How to request one

• Online Payment Agreement. Individuals who owe $50,000 or less and have filed all returns can apply online for a long-term plan; under $100,000 for a short-term plan. A practitioner can apply through a Tax Pro Account with a Form 2848 covering every period with a balance, but not if lines 5a or 5b of the 2848 have written changes.
• Phone. 800-829-1040 for individuals, 800-829-4933 for businesses, or the number on the notice. Businesses cannot use OPA.
• Form 9465. Filed with a return or alone; attach Form 433-F when the proposed payment is below the amount the form computes.
• Revenue officer. If the case is in Field Collection, the RO secures the agreement on Form 433-D.

The installment agreement eligibility tool walks through which type a client fits.

Rejection, appeal and default

In Field Collection, a proposed rejection of a pending request goes to Independent Administrative Review on Form 12233 first, and the IRM says: “Do not communicate an actual rejection to the taxpayer before IAR is completed.” After rejection, the taxpayer can appeal through the Collection Appeals Program; IRC 6159 cross-references the appeal rights in IRC 7122(e).

Default comes from missed payments, new balances, unfiled returns or a failure to provide a requested financial update (IRC 6159(b)(4)). Before acting, the IRS must give 30 days' notice with an explanation (IRC 6159(b)(5)). For IDRS monitored agreements that notice is CP523, and IRM 5.14.11.4 states that “No levies may be issued on tax periods included in agreements for 90 days after mailing Notice CP 523”. Agreements in default (not yet terminated) must be reinstated if the taxpayer cures the default, and a reinstatement fee may apply.

Termination does not restart the Collection Due Process clock. In Orum v. Commissioner, 123 T.C. 1 (2004), the taxpayers had let the 30-day window on their original levy notice pass, entered an agreement, defaulted, and then received a second notice of intent to levy. The Tax Court held that the second notice “did not entitle petitioners to a hearing as contemplated under section 6330(b)” and dismissed that year for lack of jurisdiction, so a client who skipped the CDP request before the agreement has only an equivalent hearing or a CAP appeal of the termination when the agreement later fails. Calendar the CDP deadline on the first final notice even when an agreement is about to be approved.

Questions practitioners ask