What are the terms and conditions of having an Installment Agreement?

There are several terms and conditions that you must agree to and honor if you have an Installment Agreement.

First and foremost, to receive an Installment Agreement you need to be current on all of your tax filings. If you’re not current on all of your tax filings, then you can’t get an Installment Agreement. You need to do all of your tax returns that are unfiled and if you owe money on all of those, they all need to be aggregated into a single Installment Agreement.

Secondly, once you’re granted an Installment Agreement you need to agree to file your taxes on a timely basis, as long as the Installment Agreement is in place.

This means if you have the Installment Agreement in place for five years you need to file your taxes timely for five years. The IRS is effectively saying is that they’ve given you a way to solve your back tax problems, but they don’t want you creating more problems in the future

Third, not only do you need to file your taxes on a timely basis, you also need to pay your taxes on a timely basis. If you’re self-employed or have a significant amount of investment income, you need to make estimated payments so that when it comes time to file your taxes, you do not have a balance due that’s unmanageable.

If you owe $1,000, that in and of itself will not cause an Installment Agreement to default. However if you owe $1,000 and you can’t pay it, then you have a problem because by definition you’re not supposed to owe any money to the IRS on future tax returns.

Remember, the IRS doesn’t want the tax problem to become any bigger and by doing so you are effectively adding to the Installment Agreement.

So the terms and conditions of an Installment Agreement are that you need to have all of your taxes filed and you need to file and pay your tax returns timely in the future.