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An IRS Payment Plan, also known as an Installment Agreement, allows taxpayers to pay off their tax debt in monthly installments over time. This option is ideal for taxpayers who cannot pay their full tax bill immediately but want to avoid more aggressive IRS collection actions, such as levies or wage garnishments.
Payment plans are available for both individual taxpayers and businesses, and the IRS offers various types of plans based on the taxpayer’s financial situation and the amount of tax owed.
Types of IRS Payment Plans include:
- Short-term Payment Plan: Available for taxpayers who can pay their tax debt in full within 120 days.
- Long-term Payment Plan: Available for taxpayers who need more than 120 days to pay, typically lasting up to 72 months.
- Partial Payment Installment Agreement (PPIA): Allows taxpayers to make reduced payments based on their financial situation, potentially settling for less than the full amount.
To request a payment plan, taxpayers can apply online or submit Form 9465 (Installment Agreement Request). The IRS may require financial information to approve long-term plans, particularly for large tax debts.