Owing back taxes to the IRS can feel overwhelming, especially when penalties and interest keep piling on month after month. Many Maryland taxpayers come to us after receiving notices about levies, wage garnishments, bank account seizures, or tax liens, unsure how they’ll ever catch up.
The good news is that you don’t always have to pay your tax debt all at once. The IRS offers payment solutions designed to help taxpayers resolve what they owe over time and, once entered into an approved plan, generally stop aggressive collection actions. One of the most common options is an IRS installment agreement.
At S.H. Block Tax Services, our tax resolution specialists can help Maryland taxpayers set up realistic installment agreements that fit their financial situations and reduce the stress of dealing with the IRS. See how we help clients get back on track with less pain and worry.
An IRS installment agreement is a formal payment plan that allows you to pay your tax debt in monthly installments, like paying off a car loan or mortgage.
If an installment agreement is approved and you stay compliant and current on the payments:
While interest and penalties may continue to accrue, an installment agreement often prevents the back tax situation from getting worse. An installment agreement can also open the door to abatements, penalty reduction, or other relief options.
One of the reasons installment agreements are so widely used is that the eligibility requirements are fairly straightforward.
The first step is becoming compliant with required tax filings.
Individual taxpayers generally do not have to be current on payments but shouldn’t owe going forward. Business taxpayers will likely need to make some estimated payments before being eligible.
Remember resolution options are very limited and generally the IRS will not approve a formal payment plan if you still have unfiled returns. At S.H. Block, we often help clients catch up on tax filings first so they can qualify for a payment plan or other resolution before collections become aggressive.
BLOG: What Is a Partial Pay Installment Agreement (and Do I Qualify)?
The IRS offers several types of payment options, depending on how much you owe and how quickly you can pay it back.
If you can afford to pay your balance in full right now, this option avoids future penalties and interest. There is no setup fee, and the IRS closes the account immediately.
This option works best for taxpayers with access to savings, refinancing options, or other funding sources.
If you need a little time but can pay the balance off within six months, a short-term plan may be available. This type of plan has no setup fee, and payments can be flexible within the 180-day window. However, interest and penalties will continue until the payments are completed.
Despite continuing interest, a short-term payment option can be useful if you’re expecting incoming funds but need some breathing room.
This is the most common option for taxpayers who owe larger balances.
Once approved, this type of agreement can stop most IRS collection activity as long as you stay compliant.
Your monthly payment depends largely on how much you owe and which type of agreement you qualify for. Basic options include:
If you don’t qualify for the simpler options, the IRS requires a full financial disclosure, that includes:
Based on this information, the IRS determines what they believe you can afford.
This is where many taxpayers run into trouble. Without guidance, people often agree to payments that are too high, putting them at serious risk of default later.
Our tax resolution specialists help ensure your payment proposal is realistic, sustainable, and defensible.
In some cases, the IRS may agree to let you pay only part of what you owe.
A Partial Payment Installment Agreement allows you to make monthly payments until the IRS collection statute expires—usually 10 years from the assessment date. Any remaining balance may be forgiven at the end of that period.
This option is typically available to taxpayers with limited income and assets and requires careful planning. The IRS reviews finances closely and mistakes can be costly.
At S.H. Block Tax Services, we can help you determine whether this option is appropriate and structure payments to avoid unnecessary risk.
The IRS generally allows one missed payment per year, but repeated missed payments can put your agreement into default.
If an installment agreement defaults, the IRS may resume:
If you think you may miss a payment, do not wait until it’s too late. Contact S.H. Block Tax Services to help adjust, renegotiate, or modify payment plans before default occurs.
BLOG: What Happens if I Default on My IRS Installment Agreement?
While installment agreements do not automatically eliminate penalties and interest, they can:
In some cases, penalties can be reduced or removed once you’re compliant and making payments.
In most cases, yes. Wage garnishments and levies generally stop once an installment agreement is active and payments are current.
Yes. Payment plans can be modified if your financial situation changes. However, there may be fees depending on how the change is requested.
The IRS may still file a lien, especially for larger balances, but collection actions are usually paused.
You may qualify for alternative solutions such as Currently Not Collectible status or a Partial Payment Agreement. A review of your finances is required.
While it is possible, many taxpayers end up with payments they can’t sustain. Working with an experienced tax resolution specialist helps protect you from long-term problems.
At S.H. Block Tax Services, installment agreements are one of our most common and effective resolution strategies. Our team will:
We understand Maryland taxpayers and the pressure IRS debt creates. Our goal is to help you regain stability by not just setting up a payment plan, but also creating a path forward.
If IRS penalties and interest are adding up and you’re not sure how to move forward, an installment agreement may be the solution you need.
Call S.H. Block Tax Services at (410) 872-8376 or complete our online contact form to schedule a free consultation. We’ll review your situation, explain your options, and help you take back control of your tax debt one manageable step at a time.
This webpage is based on tax laws, regulations, and administrative guidance in effect at the time it was written. Tax law and IRS procedures are subject to change, and interpretations may evolve. As a result, some information in this article may become outdated. This content is provided for general informational purposes only and should not be relied upon as tax or legal advice. Readers should consult a qualified tax professional regarding their specific situation.
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