What are the terms and conditions when I receive an installment agreement?

There are several terms and conditions that you need to understand and abide by.

When you receive an installment agreement from the IRS to pay off your past IRS debts, you agree with the IRS that on a going forward basis, while the installment agreement is in effect, to file your taxes on a timely basis. You can’t be late on your filing.

You also agree to pay your taxes on a timely basis. That means you can’t file your taxes at the end of the year and owe a balance that you can’t afford to pay.

If you do, that is technically going to default the installment agreement. If you owe $100 when you file your taxes and you write a check for $100, then all is well. If you owe $1,000 when you file your taxes and you can’t pay it, then technically you are going to default the installment agreement.

So you need to agree to file and pay your taxes on time and then you must make every single installment agreement payment. You cannot make a lump sum. Let’s just say your amount is $200 a month and one month you come into a little bit of money, so you make a payment of $1,000. Technically you are paying five months in advance. But as far as the IRS is concerned, you’ve agreed to pay a certain amount per month and they expect to receive that amount each and every month.