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Can I Add Tax Owed to an Existing IRS Installment Agreement?

For many individuals, paying off entire debts in one go isn’t an option. Fortunately, there are alternatives, and the IRS installment agreement is one such solution. This approach allows taxpayers to strategize their debt payment, making it more manageable and preventing additional financial strain and further legal troubles with the authorities, such as levies

Now, what about owing additional taxes and incorporating them into an existing IRS installment agreement? The good news is that it’s possible. However, the feasibility depends on many factors. Continue reading to learn more about the details of installment agreements, eligibility criteria, the process of adding more tax owed to an existing IRS installment agreement, and more! 


Understanding IRS Installment Agreements 

An IRS installment agreement is a payment plan that allows taxpayers to settle their debt over time. The payment plan offers both short-term and long-term payment options. Short-term agreements involve clearing the debt within 180 days, while long-term agreements can extend up to 72 months.

To qualify for a short-term payment plan, individuals must have a total balance of less than $100,000 in combined tax, penalties, and interest. For a long-term payment plan, individuals with a combined tax liability, penalties, and interest of $50,000 or less and businesses with $25,000 or less in combined debt meet the eligibility criteria.

You can apply for these installment payments online

Note that interest and late-payment penalties will continue to be accrued on the unpaid debt during the installment agreement. 

Clipboard with an IRS Installment Agreement Request document and pen


Adding New Tax Owed to an Existing IRS Installment Agreement 

While the IRS typically doesn’t allow taxpayers to have two separate installment agreements, adding a new tax debt to an existing installment plan is possible. However, taxpayers must act swiftly before the IRS assesses the new tax balance and potential default occurs, triggering enforcement actions.


Conditions for Adding Debt 

The IRS evaluates various factors when determining eligibility for incorporating new tax debt into an existing agreement. These considerations encompass the individual’s financial situation, payment history, total debt amount, and compliance with tax filing obligations.

Besides the specific rules and restrictions on different types of installment agreements, the IRS may also impose limitations based on taxpayers’ financial capabilities and history of compliance. Moreover, how often individuals request modification can also affect approval. For example, frequent requests may end up in more scrutiny. Therefore, it’s advisable to follow the process accordingly and consult your trusted tax attorney. Their expertise can assist you in achieving the desired outcome.

Impact on Existing Agreement Terms 

Incorporating new debt into an existing agreement can affect the current terms. Adding a new debt may result in adjusting your monthly payment plan, such as the amount of payment and the total repayment agreement. The IRS will evaluate your current financial situation, taking into account the new debt, and based on that, calculate the installment payments to ensure taxpayers can meet their obligations. 

Staying informed and maintaining open communication with the IRS can help navigate these adjustments effectively.

Person working on installment agreement at a desk with a laptop and calculator


The Process of Modifying an IRS Installment Agreement 

Taxpayers can request the addition of new tax debt by using the IRS’s online payment agreement tool. Through this tool, you can revise the type of plan, payment amount, and payment due date. Individuals can also contact the IRS by phone or mail to set the changes. 

The documentation required depends on the nature of the modifications. Typically, the IRS may ask for documents such as tax returns, bank information, and collection information statements (Form 433-F). Additionally, set-up fees may be charged to cover the cost of providing the installment agreement. 


Seeking Professional Tax Assistance 

Navigating the complexities of tax laws is challenging, and errors may lead to significant issues with the authorities. That’s why seeking guidance from a tax attorney is crucial. Our expertise, legal representation, strategic planning, and proficiency in navigating tax intricacies can ensure optimal outcomes and offer peace of mind. If you require legal consultation, don’t hesitate to contact Greenberg Law Group, P.A. Our dedicated team is ready to assist you and provide the best advice for your specific situation.


End Note

Establishing a payment plan with the IRS is a proactive way to manage your debt and avoid potential issues. Compliance with current tax laws and maintaining open communication with the IRS are essential factors influencing the approval process if you intend to add additional debt to your existing IRS installment agreement. 

Don’t delay addressing your debt—reach out to us, and we’ll assist you in achieving the desired outcomes for your tax matters!


Greenberg Law Group, P.A. - Get in touch today!