CTRS CTRS Installment Agreements and Payment Plans 1 — Questions and Answers
Question 1: What is a Streamlined Installment Agreement and what are the eligibility criteria for individuals?
- An installment agreement for individuals who owe $50,000 or less and can pay within 72 months, requiring no financial statement (Correct answer)
- An installment agreement for businesses owing $25,000 or less payable in 24 months
- An expedited agreement available only to first-time delinquent taxpayers
- An agreement requiring full payment within 12 months for any balance
Correct answer: An installment agreement for individuals who owe $50,000 or less and can pay within 72 months, requiring no financial statement
The Streamlined Installment Agreement allows individuals owing $50,000 or less (in combined tax, penalties, and interest) to set up a payment plan for up to 72 months without submitting a financial statement.
Question 2: What is a Guaranteed Installment Agreement and who qualifies?
- Individuals who owe $10,000 or less in income taxes and can pay within 3 years are guaranteed an installment agreement by statute (Correct answer)
- Any taxpayer who has never been delinquent before is guaranteed an installment agreement
- Businesses with less than $50,000 in payroll tax liabilities are guaranteed an installment agreement
- Any taxpayer who agrees to direct debit is guaranteed an installment agreement
Correct answer: Individuals who owe $10,000 or less in income taxes and can pay within 3 years are guaranteed an installment agreement by statute
Under IRC §6159(c), individuals who owe $10,000 or less in income taxes, can pay within 3 years, and meet other basic criteria are legally entitled to an installment agreement.
Question 3: What is a Partial Pay Installment Agreement (PPIA) and how does it differ from a standard installment agreement?
- A PPIA allows monthly payments below full liability, with the remaining balance potentially expiring uncollected when the CSED runs out (Correct answer)
- A PPIA reduces the outstanding liability by 50% before setting up payment terms
- A PPIA requires the taxpayer to pay only the principal without any interest or penalties
- A PPIA is identical to a standard IA but is only available for payroll tax liabilities
Correct answer: A PPIA allows monthly payments below full liability, with the remaining balance potentially expiring uncollected when the CSED runs out
A PPIA is based on the taxpayer's actual ability to pay, resulting in monthly payments that will not fully satisfy the liability; any balance remaining when the CSED expires becomes uncollectible.
Question 4: What IRS form is used to request an installment agreement?
- Form 9465 (Correct answer)
- Form 433-A
- Form 12153
- Form 8822
Correct answer: Form 9465
Form 9465 (Installment Agreement Request) is the standard form taxpayers use to formally request an installment agreement with the IRS.
Question 5: Does entering into an installment agreement stop the accrual of penalties and interest on the outstanding tax balance?
- No, penalties and interest continue to accrue until the balance is paid in full (Correct answer)
- Yes, both penalties and interest stop accruing once an IA is approved
- Yes, but only the failure-to-pay penalty stops; interest continues
- Only the failure-to-file penalty stops; failure-to-pay and interest continue
Correct answer: No, penalties and interest continue to accrue until the balance is paid in full
An installment agreement does not stop interest or penalty accrual; both continue to accumulate on the unpaid balance throughout the life of the agreement.
Question 6: What is the user fee for establishing a direct debit installment agreement (DDIA) online?
- $31 (Correct answer)
- $107
- $149
- $225
Correct answer: $31
As of current IRS guidance, the user fee for setting up a direct debit installment agreement online is $31, which is substantially lower than the fee for non-direct debit agreements.
CTRS CTRS Installment Agreements and Payment Plans 1
What is a Streamlined Installment Agreement and what are the eligibility criteria for individuals?