An IRS installment plan is an agreement to pay your tax debt back over time in monthly payments. When you owe a tax debt to the IRS, they have a number of ways of collecting from you, including levying your bank account or wages, seizing your state tax refund, or seizing your home and selling it at an auction. An installment agreement is one strategy that can be used to halt these collection activities.
Before you consider negotiating an installment plan, you should be aware that there are other options that may be able to reduce your tax debt. If you are unable to pay back your tax debt, you may qualify for an Offer in Compromise. You may also consider using a tax bankruptcy, obtaining innocent spouse relief, or disputing the amounts you owe to the IRS.
All of these strategies can be used to effectively wipe out some or all of your tax debt, and they can also be combined with installment agreements in some cases. Consult with a tax attorney before you commit to a monthly payment plan with the IRS.