Darrin Mish: Installment agreements, also known as payment plans.

It's pretty obvious what a payment plan is, or an installment agreement. The word installment agreement has special meaning, though, with the IRS. It's basically something that, if you have an installment agreement, if it's a formal installment agreement, then the IRS cannot levy or take any other adverse action against you collection action against you if you have an installment agreement in place. Exception: They can file a federal tax lien, and they often will, if you owe more than $5,000.

So, what types of installment agreements are there? There are essentially four that I can identify.

There's something known as a guaranteed installment agreement. In a nutshell, this is what it is: If a taxpayer owes less than $10,000, they can full pay the liability within a three year time frame, then they are guaranteed that installment agreement. The IRS basically can't say no. A whole bunch of conditions obviously, a whole bunch more details to it, but that's the bottom line. If you owe $10,000 or less and you can pay it off in three years, call the IRS. They give you an installment agreement, guaranteed. Especially if you haven't had one recently.

If you've had one in the past several years, then they don't have to give it to you, although my practical experience says they probably will.

The second type of installment agreement is called a streamline installment agreement. Basically if the taxpayer owes under 25 grand, $25,000 that is, and it can be paid off within 60 months, then the IRS will go ahead and give that person an installment agreement without having to provide any financial documentation. That's also true in the guaranteed installment agreement. No financial documentation is typically required. It has to be supplied, though, if demanded by the IRS. One of the prerequisites in both the guaranteed and the streamline installment agreement is that the taxpayer has no present ability to pay the liability in full. I leave that out most of the time because I just assume that that is the case, that the taxpayer doesn't have the ability to write a check for 25 grand.

The third type of installment agreement is something that I invented the name for, basically. No one else uses it to the best of my knowledge. I call it a complex installment agreement. It's basically where the liability is over $25,000 and the taxpayer cannot pay it within a five year time frame. Then essentially the IRS will go ahead and do some financial analysis and determine what the taxpayer's ability to pay is.

[noise] Oops, I hate it when I drop the microphone.

The fourth and final type of installment agreement that I was able to identify is what's known as a partial pay installment agreement. That is essentially an installment agreement where the taxpayer cannot full pay the liability during the life of the collection statute of limitations. If you don't know what I mean there, by the collection statue of limitations, go back and look at the other earlier video blog posts dealing with that, and you'll understand. Basically a partial pay installment agreement is a great deal. It means you're not going to have to full pay the liability within the lifespan of the installment agreement. You're going to get a deal one way or the other.

That's it for now. I'm over time. Thanks for tuning in.