If the IRS approves an installment agreement, it will generally keep all tax refunds and apply them to your debt. Usually, you'll make monthly payments to settle what you owe. As long as you're up to date with that, the IRS generally won't garnish your salary or seize any bank accounts or property. However, signing up for an IRS payment plan doesn't exempt you from interest and penalties for late payments; these accrue until your balance is zero.
Use Form 9465 to request a monthly installment plan if you can't pay the full amount you owe listed on your tax return (or in a notice we sent you). Installment direct debit agreements have a lower user fee compared to other installment agreements, and the user fee may not apply or be reimbursed to low-income taxpayers. No, one of the terms of your installment agreement is that the IRS will automatically apply any refund (or overpayment) owed to you against the taxes you owe. A request for an installment agreement is usually pending until it can be reviewed and an installment agreement is established, or the request is withdrawn or denied.
The taxpayer can request a Collection Appeals Program (CAP) hearing to discuss proposed cancellations and the actual terminations of installment agreements. Finally, if you exercise your right to appeal the rejection or termination of an installment payment agreement, the collection period is suspended when the appeal is pending until the date when the appealed decision becomes final. Applicants must submit the form to the IRS within 30 days from the date of their letter of acceptance of the installment agreement to ask the IRS to reconsider their status. For information on payment arrangements, installment agreements, and what happens when you don't take any steps to pay, see Publication 594, IRS Collection Process (PDF).
A taxpayer whose installment agreement is overseen by IDRS will receive Notice CP 523, Late Installment Agreement: Notice of Intent to Collect. To request a payment plan, use the OPA application, complete Form 9465 (Request for an Installment Payment Agreement) and mail it to us or call the appropriate telephone number listed below. Similarly, if you do not comply with the payments in your installment agreement and the IRS proposes to terminate the installment agreement, the collection period is suspended for 30 days. Submit your request online through the online payment agreement tool or by phone or by mail by submitting Form 9465, Request for an Installment Agreement.
If the requested installment agreement is rejected, the collection period is suspended for 30 days. An unfulfilled installment agreement may be reinstated without manager approval if it is determined that the agreement was terminated “due to additional liability” and if the addition of that new liability will not result in more than two additional monthly payments and the agreement will not extend beyond the Expiration Date of collection (CSED) (“Section 11). With certain exceptions, the IRS is generally prohibited from charging and the IRS's time to collect is suspended or extended while an installment agreement is pending. The IRS defines a breach of an installment agreement as the taxpayer providing inaccurate information or the taxpayer not complying with the terms of their agreement.
If the IRS system identifies you as a low-income taxpayer, the online payment agreement tool will automatically reflect the applicable rate.