An installment contract is an agreement where payment is made, or performance of services is given over a specified period of time. There are three kinds of installment agreements; streamlined installment agreements, basic installment agreements, and partial pay installment agreements.
Streamlined Installment Agreement
A streamlined installment agreement is an installment agreement where individuals can pay the full amount of money owed to the IRS in a period of over 60 months. This applies when the amount is less than $25,000.
Basic Installment Agreement
This installment agreement requires the individual to complete a financial form (433A or F). The form must be submitted to the IRS for review. The installment agreement will then be based on that form. It will essentially be an agreement where you pay your monthly income minus “allowable expenses”. This means that only the expenses the IRS approves will be taken out.
Partial Pay Installment Agreement
A partial pay installment agreement means that the IRS has only a limited time to collect the taxes owed to them. This time limit is called the Statute of Limitations. If an individual is close to their Statute of Limitations running out, and they will not be able to pay the IRS in full, they will have a partial payment installment agreement. This installment agreement will not require an individual to pay their taxes in full.