An installment agreement is an agreement between the IRS and a taxpayer to allow the taxpayer to pay taxes owed in monthly payments. Usually the IRS will use its financial guidelines for determining how much a taxpayer can pay. Once an agreement is accepted, the taxpayer must comply to the terms. Otherwise, it will result in a default of the installment agreement. It is critical from the beginning to understand that an installment agreement is a major part of being compliant, and needs to be maintained.
There are various types of installment agreements, and they include: Automatic Installment Agreement, Streamlined Installment Agreement, Regular Installment Agreement, and Partial Pay Installment Agreements. Each has its own unique requirements.