Taxpayers who are unable to pay their taxes in full can frequently use a payment plan to pay off their IRS debt gradually. However, can you have two payment plans with the IRS if you find yourself in need of additional tax debt in the future? Regretfully, the answer to this question is no. If you’re still paying on a previous payment plan, any new tax debt could jeopardize your existing agreement. There is, however, a solution for dealing with the additional tax debt and avoiding collection actions.
The IRS typically doesn’t allow taxpayers to have two separate installment agreements at the same time. This is because an installment agreement is a legally binding contract between you and the IRS to pay off a specific tax debt over a set period Having multiple agreements could make it difficult to manage your payments and could lead to default.
However, there are some exceptions to this rule. You may be able to have two installment agreements if:
- One of the agreements is for a business and the other is for an individual.
- You have a significant change in your financial circumstances, such as a job loss or a medical emergency.
- You are experiencing a temporary hardship, such as a natural disaster.
If you believe you may qualify for an exception, you should contact the IRS directly to discuss your situation
Here’s a breakdown of the different types of payment plans available from the IRS:
- Short-term payment plan: This plan allows you to pay off your tax debt in 180 days or less. There are no setup fees for this plan, but you will still be charged interest and penalties on the unpaid balance.
- Long-term payment plan (installment agreement): This plan allows you to pay off your tax debt over a longer period, typically up to 72 months. There are setup fees for this plan, which vary depending on your income and how you choose to make your payments. You will also still be charged interest and penalties on the unpaid balance.
- Offer in compromise (OIC): This is an option for taxpayers who are unable to pay their tax debt in full. An OIC allows you to settle your debt for a lower amount. However, you must meet certain eligibility requirements to qualify for an OIC.
Here are some additional things to keep in mind about IRS payment plans:
- You must file all required tax returns and pay any estimated taxes on time while you are on a payment plan.
- You must make your payments on time or you could be subject to penalties and interest charges.
- If you default on your payment plan, the IRS may take collection action against you, such as garnishing your wages or levying your property.
If you are struggling to pay your taxes, it is important to contact the IRS as soon as possible to discuss your options. There are a variety of payment plans and other programs available to help you get back on track.
Here are some additional resources that you may find helpful:
- IRS website: https://www.irs.gov/payments
- Publication 594, The IRS Collection Process: https://www.irs.gov/pub/irs-pdf/p594.pdf
- Taxpayer Advocate Service: https://www.taxpayeradvocate.irs.gov/
Amending an Existing IRS Payment Plan
You should be able to modify your current agreement to include the new tax debt, even though the IRS will not permit you to have multiple payment plans at the same time. If you anticipate having to pay more taxes, it’s crucial that you get in touch with the IRS to adjust your payment schedule. You will be deemed to be in default under the terms of your current agreement if you wait until the IRS assesses the tax debt.
To amend your existing agreement before the new taxes are assessed:
- Speak with an IRS representative at 1-800-829-7650 about changing your existing payment schedule;
- Visit a local IRS tax office; or
- Submit IRS Form 9465, Installment Agreement Request.
You can either mail in Form 9465 or amend your existing payment plan online (if you owe less than $50,000). Be sure to include information regarding your original payment plan balance, as well as the expected new tax debt. It’s also important to note that there is an $89 fee for amending your existing agreement, regardless of how you apply for it. Some low-income taxpayers may qualify for a fee waiver.
You can modify the type of plan, the payment amount, and the payment date when making changes to your payment schedule. However, if the IRS receives a monthly payment request that is too low, they may ask you to make an additional payment.
The Most Common Types of IRS Payment Plans
The kind of payment plan you get if you are in arrears on taxes and are unable to pay will be determined by the total amount of your tax debt and your eligibility. In general, the IRS typically places taxpayers into one of the following types of installment agreements.
This plan, also called a short-term installment agreement, is intended for people who can pay off their debt in less than 120 days and owe less than $10,000 (including penalties and interest fees). Additionally, the following must also be true:
- In the previous five years, you haven’t engaged in any other payment arrangements.
- It is necessary for you to be able to pay back at least the total amount owed (including interest and penalties) divided by thirty.
- Over the previous five years, all necessary income tax returns were filed and payments were made.
The IRS may approve a streamlined installment agreement for people who owe $50,000 or less (including penalties and interest) but are unable to pay the entire amount in 120 days. To qualify, the following must be true:
- You can pay the balance within 72 months.
- Monthly payments must equal at least $25 or the total amount owed over the term of the agreement, divided by 72 (including interest and penalties).
If your debt exceeds $50,000, you might be able to work out a non-streamlined installment agreement with the IRS. For this type of payment plan, you will be required to submit IRS Form 433-F, Collection Information Statement. The IRS will either approve or deny your request based on the financial data on Form 433-F and the amount of the proposed payment. Additionally, the IRS will file a tax lien with this type of payment plan.
How to apply for a payment plan online with the IRS
FAQ
Can you have more than 1 IRS payment plan?
How many payments can I pay the IRS?
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Tax Form
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Payment Type and Tax Year
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Limit
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Form 1040
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Prior Tax Year
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2 per year
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Proposed Tax Assessment CP 2000/2501/ CP 3219A
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2 per year
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Installment Agreement
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2 per month
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Form 1040-ES
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Estimated Tax
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2 per quarter
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Can you make multiple IRS payments?
How much will IRS accept for payment plans?
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Payment plan type
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Maximum you can owe to qualify
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Short-term payment plan (180 days or less)
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$100,000 in combined tax, penalties and interest.
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Long-term payment plan (more than 180 days)
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$50,000 in combined tax, penalties and interest.
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