Installment Agreement Request

INSTALLMENT AGREEMENT REQUEST

Comprehensive Cover Letter, Financial Analysis, and Submission Package
Under IRC § 6159 and IRS Form 9465

PART I — OVERVIEW OF IRS INSTALLMENT AGREEMENTS

A. Legal Authority

IRC § 6159 authorizes the IRS to enter into installment agreements with taxpayers for the payment of tax liabilities. The IRS is required to accept certain installment agreements (guaranteed agreements under § 6159(c)) and has discretion to accept others based on the taxpayer's financial circumstances and compliance history.

B. Types of Installment Agreements

B.1. Guaranteed Installment Agreement — IRC § 6159(c)

The IRS must accept an installment agreement if ALL of the following conditions are met:

1. The aggregate tax liability (excluding penalties and interest) does not exceed $10,000
2. During the 5 preceding tax years, the taxpayer (and spouse, if filing jointly) timely filed all income tax returns and paid all income tax shown on such returns
3. The taxpayer has not entered into an installment agreement during any of the 5 preceding tax years
4. The IRS determines that the taxpayer is financially unable to pay the liability in full when due
5. The taxpayer agrees to pay the full amount within 3 years
6. The taxpayer agrees to comply with all tax laws while the agreement is in effect

B.2. Streamlined Installment Agreement — IRM 5.14.5.2

Available for individual taxpayers who meet the following criteria:

Requirements for Streamlined IA:

• All required returns must be filed
• The balance must be payable within the CSED (Collection Statute Expiration Date)
• Minimum payment: Total balance owed divided by 72 months (or 84 months if eligible)
• Direct debit is required for balances between $25,001 and $100,000
• No financial statement required (Form 433-A/F not needed)

B.3. Non-Streamlined Installment Agreement — IRM 5.14.1

Required when:

• The balance exceeds streamlined thresholds
• The taxpayer cannot meet minimum streamlined payment amounts
• Business tax liabilities are included
• The taxpayer does not qualify for guaranteed or streamlined IA

Requirements:

• Complete financial disclosure (Form 433-A for individuals, Form 433-B for businesses)
• Supporting financial documentation
• IRS verification of income, expenses, and assets
• Payment based on IRS National and Local Standards for allowable expenses

B.4. Partial Payment Installment Agreement (PPIA) — IRC § 6159(a); IRM 5.14.2

A PPIA is an installment agreement where the total payments over the remaining collection statute will NOT pay the full balance owed.

Key Features:

• Available when the taxpayer cannot full-pay within the CSED
• Requires complete financial disclosure (Form 433-A/433-B and Form 433-F)
• The IRS must review the agreement every 2 years to determine if the taxpayer's financial condition has changed (IRC § 6159(a))
• The IRS will consider whether an offer in compromise (IRC § 7122) is a viable alternative
• A Notice of Federal Tax Lien will generally be filed

B.5. In-Business Trust Fund Express Installment Agreement — IRM 5.14.5.4

Available for business taxpayers with:

• Employment tax liability of $25,000 or less
• Agreement to pay within 24 months
• All required returns filed
• Current tax deposits being made

C. User Fees (Effective for Agreements Entered Into on or After July 1, 2024)

Low-Income Qualification: Adjusted gross income at or below 250% of the federal poverty level. Apply for reduced fees using Form 13844, Application for Reduced User Fee for Installment Agreements.

D. Effects of an Installment Agreement

1. Failure-to-Pay Penalty Reduction: The failure-to-pay penalty rate is reduced from 0.5% to 0.25% per month while an installment agreement is in effect (IRC § 6651(h))
2. No Levy: The IRS generally will not levy while an installment agreement is in effect (IRC § 6331(k))
3. Interest Continues: Interest continues to accrue on the unpaid balance during the installment agreement period at the applicable federal rate under IRC § 6621
4. NFTL Filing: The IRS may file a Notice of Federal Tax Lien even with an installment agreement in place, particularly for balances over $25,000 or for PPIAs
5. CSED Not Suspended: Unlike an OIC, the collection statute of limitations (CSED) is generally NOT suspended during an installment agreement (but is suspended during the pendency of an IA request and for 30 days after rejection)

PART II — ELIGIBILITY DETERMINATION WORKSHEET

Complete this worksheet to determine the appropriate type of installment agreement.

Step 1: Total Balance Assessment

Total Aggregate Balance Due: $[________________________________]

Step 2: Compliance Verification

Step 3: Agreement Type Determination

Based on the total balance and compliance history, check the applicable agreement type:

☐ Guaranteed IA (IRC § 6159(c))

• Balance (tax only, excluding penalties/interest) ≤ $10,000
• Timely filed and paid for last 5 years
• No IA in last 5 years
• Can pay in full within 3 years

☐ Streamlined IA — Tier 1 ($10,001 - $25,000)

• No financial statement required
• Full payment within 72 months
• Individual income tax only

☐ Streamlined IA — Tier 2 ($25,001 - $50,000)

• No financial statement required
• Direct debit or payroll deduction required
• Full payment within 72 months
• Individual income tax only

☐ Streamlined IA — Tier 3 ($50,001 - $100,000)

• No financial statement required
• Direct debit required
• Full payment within 84 months
• Individual income tax only

☐ Non-Streamlined IA (over applicable threshold)

• Financial statement required (Form 433-A/433-B and/or 433-F)
• Supporting documentation required
• IRS will verify financial information

☐ Partial Payment IA (PPIA)

• Balance exceeds ability to pay in full before CSED
• Financial statement required
• Subject to biennial review
• NFTL will generally be filed

☐ In-Business Trust Fund Express IA

• Employment tax liability ≤ $25,000
• Full payment within 24 months
• All employment tax returns filed
• Current deposits being made

Step 4: Collection Statute Expiration Date (CSED) Calculation

Earliest CSED: [__/__/____]
Latest CSED: [__/__/____]

Step 5: Minimum Payment Calculation

PART III — FINANCIAL ANALYSIS (FOR NON-STREAMLINED AND PPIA REQUESTS)

A. Monthly Income

B. Monthly Expenses (IRS National and Local Standards)

The IRS uses National Standards (food, clothing, personal care, miscellaneous) and Local Standards (housing, transportation) to determine allowable expenses. Actual expenses may be allowed if they exceed standards and the taxpayer can demonstrate necessity.

C. Disposable Income Calculation

D. Asset Analysis

Note: For PPIA requests, the IRS will consider whether assets can be liquidated to pay the tax liability. Retirement accounts are generally not included in the asset calculation unless the taxpayer is of retirement age.

PART IV — PAYMENT PROPOSAL

A. Proposed Agreement Terms

B. Payment Method

☐ Direct Debit (DDIA) — Automatic withdrawal from bank account

• Bank Name: [________________________________]
• Routing Number: [________________________________]
• Account Number: [________________________________]
• Account Type: ☐ Checking ☐ Savings

☐ Payroll Deduction — Employer withholds from paycheck

• Employer Name: [________________________________]
• Employer Address: [________________________________]
• Form 2159 (Payroll Deduction Agreement) attached: ☐ Yes

☐ Check or Money Order — Mailed monthly to IRS

• Note: Higher user fee; not available for streamlined agreements over $25,000

☐ Electronic Federal Tax Payment System (EFTPS)

• EFTPS Enrollment Number: [________________________________]

☐ IRS Direct Pay — Online payment at irs.gov/directpay

☐ Credit/Debit Card — Via approved payment processor

• Note: Processing fee charged by third-party processor

C. Partial Payment IA (PPIA) — Additional Information

If proposing a PPIA, complete this section:

Justification for PPIA:

The Taxpayer's net monthly disposable income of $[________________________________] does not permit full payment of the $[________________________________] balance before the CSED of [__/__/____]. Based on the financial analysis in Part III, the proposed monthly payment of $[________________________________] represents the maximum amount the Taxpayer can afford while maintaining necessary living expenses under IRS National and Local Standards.

[________________________________]
[________________________________]
[________________________________]

PART V — SUBMISSION PACKAGE CHECKLIST

Required for ALL Installment Agreement Requests

☐ IRS Form 9465 — Installment Agreement Request (completed and signed)
☐ This Cover Letter and Supporting Documentation
☐ Copy of most recent tax return(s) for period(s) at issue
☐ Proof of current compliance (current year return filed or extension in place)
☐ User fee payment (or Form 13844 for low-income fee waiver)
☐ Form 2848 — Power of Attorney (if represented)

Additional Documents — Streamlined IA ($25,001-$100,000)

☐ Form 433-D — Installment Agreement (Direct Debit authorization)
☐ Voided check or bank account verification for direct debit setup
☐ Form 2159 — Payroll Deduction Agreement (if payroll deduction elected)

Additional Documents — Non-Streamlined IA

☐ Form 433-A — Collection Information Statement for Wage Earners and Self-Employed Individuals
☐ Form 433-B — Collection Information Statement for Businesses (if applicable)
☐ Form 433-F — Collection Information Statement (alternative simplified form)

Supporting Financial Documentation:
☐ Pay stubs or income verification (last 3 months)
☐ Self-employment income documentation (last 12 months, if applicable)
☐ Bank statements for ALL accounts (last 3 months)
☐ Investment and retirement account statements (last 3 months)
☐ Mortgage statement(s) or lease agreement(s)
☐ Vehicle loan/lease statements
☐ Insurance documentation (health, auto, homeowner's, life)
☐ Utility bills (last 3 months)
☐ Court-ordered payment documentation (alimony, child support)
☐ Student loan statements
☐ Medical expense documentation (if claiming above-standard)
☐ Business profit and loss statement (last 12 months)
☐ Business balance sheet (current)
☐ Real property documentation (deed, appraisal, property tax bill)
☐ Vehicle valuation (KBB/NADA printout)
☐ Other: [________________________________]

Additional Documents — PPIA

☐ All non-streamlined documents listed above
☐ Detailed CSED calculation
☐ Written explanation of inability to pay in full
☐ Documentation of any special circumstances or hardship

Low-Income Fee Waiver

☐ Form 13844 — Application for Reduced User Fee for Installment Agreements
☐ Proof of income (most recent tax return, pay stubs, or benefits statements)

PART VI — COVER LETTER

[________________________________]
Law Firm / Taxpayer Letterhead

[__/__/____]

Internal Revenue Service
[________________________________]
[________________________________]
[________________________________]
[Automated Collection System / Revenue Officer Name and Address]

Via Certified Mail, Return Receipt Requested
Certified Mail No.: [________________________________]

Re: Installment Agreement Request Under IRC § 6159
Taxpayer: [________________________________]
SSN/EIN: [________________________________]
Tax Period(s): [________________________________]
Total Balance Due: $[________________________________]
Proposed Monthly Payment: $[________________________________]

Dear Sir or Madam:

On behalf of [________________________________] ("Taxpayer"), I submit this request for an installment agreement pursuant to IRC § 6159 for the tax period(s) identified above. Enclosed is the completed Form 9465, supporting financial documentation, and this cover letter summarizing the Taxpayer's financial situation and proposed payment terms.

Agreement Type Requested

☐ Guaranteed Installment Agreement under IRC § 6159(c)
☐ Streamlined Installment Agreement under IRM 5.14.5.2
☐ Non-Streamlined Installment Agreement under IRM 5.14.1
☐ Partial Payment Installment Agreement (PPIA) under IRC § 6159(a)
☐ In-Business Trust Fund Express IA under IRM 5.14.5.4

Taxpayer's Financial Summary

The Taxpayer's current financial situation is summarized as follows:

Proposed Payment Terms

The Taxpayer proposes a monthly payment of $[________________________________], beginning on [__/__/____], via [direct debit / payroll deduction / check / EFTPS]. Based on this payment amount, the total balance of $[________________________________] will be paid in full within [________________________________] months, [which is within the CSED / which does not fully satisfy the balance before the CSED (PPIA)].

Current Compliance

The Taxpayer confirms the following compliance status:

☐ All required tax returns have been filed
☐ Current year estimated tax payments are being made / withholding is adequate
☐ Current year employment tax deposits are current (if applicable)
☐ The Taxpayer will maintain compliance with all filing and payment obligations during the term of the installment agreement

Special Circumstances (if applicable)

[________________________________]
[________________________________]
[________________________________]

Enclosed Documents

The following documents are enclosed with this request:

1. Form 9465 — Installment Agreement Request
2. [Form 433-A / Form 433-F / Form 433-B] — Collection Information Statement (if applicable)
3. Supporting financial documentation (see attached index)
4. Form 2848 — Power of Attorney (if applicable)
5. Form 13844 — Application for Reduced User Fee (if applicable)
6. Form 433-D — Installment Agreement / Direct Debit Authorization (if applicable)
7. [Other: ________________________________]

Please process this request at your earliest convenience. If additional information is required, please contact the undersigned at the telephone number or email address listed below.

Respectfully submitted,

[________________________________]
[________________________________]
[________________________________]
[________________________________]
[________________________________]
Attorney / Taxpayer Name
Firm Name (if applicable)
Address
Telephone / Email
CAF Number (if representative)

PART VII — DEFAULT, MODIFICATION, AND REINSTATEMENT

A. Grounds for Default (IRC § 6159(b)(4) / IRM 5.14.7)

The IRS may terminate an installment agreement if:

1. The taxpayer fails to make a timely payment under the agreement
2. The taxpayer fails to pay any other tax liability that becomes due during the term of the agreement
3. The taxpayer fails to provide a financial condition update when requested
4. The taxpayer fails to file a required tax return
5. The IRS determines that the financial condition of the taxpayer has significantly changed
6. The taxpayer provided inaccurate or incomplete information in connection with the agreement

B. IRS Notification Requirements Before Termination

Under IRC § 6159(b)(5), the IRS must provide the taxpayer with 30 days' written notice before modifying or terminating an installment agreement. The notice must include the reason for the proposed modification or termination.

C. Appeal Rights Upon Default or Termination

• Collection Appeals Program (CAP): The taxpayer may appeal the proposed modification or termination using Form 9423, Collection Appeal Request (IRM 5.1.9)
• CDP Hearing: If the IRS issues a new CDP notice after terminating the agreement, the taxpayer may request a CDP hearing under IRC § 6330
• Taxpayer Advocate Service: The taxpayer may contact the Taxpayer Advocate Service (TAS) if experiencing hardship (IRC § 7803(c))

D. Reinstatement Procedures

If an installment agreement has defaulted, the taxpayer may request reinstatement:

E. Preventing Default — Best Practices

☐ Set up direct debit to avoid missed payments
☐ Calendar the monthly payment date
☐ File all future tax returns timely
☐ Make current year estimated tax payments
☐ Contact the IRS immediately if unable to make a payment
☐ Request modification of the agreement if financial circumstances change
☐ Maintain documentation of all payments made

PART VIII — ALTERNATIVE COLLECTION OPTIONS

A. Short-Term Payment Plan (120 Days or Less)

If the taxpayer can pay the full balance within 120 days, no formal installment agreement or user fee is required.

B. Offer in Compromise (IRC § 7122)

An OIC may be preferable if:

• The taxpayer cannot pay the full balance within the CSED even through a PPIA
• The taxpayer has minimal assets and income
• Equity and future income are insufficient to pay the liability

C. Currently Not Collectible (CNC) Status

CNC may be appropriate if:

• The taxpayer has no disposable income or equity in assets
• Payment of any amount would cause economic hardship
• The taxpayer cannot afford even a minimal installment payment

D. Bankruptcy

In some cases, tax liabilities may be dischargeable in bankruptcy:

• Income tax debts may be dischargeable under 11 U.S.C. § 523(a)(1) if certain conditions are met (3-year rule, 2-year rule, 240-day rule)
• Trust fund taxes (IRC § 6672) are NOT dischargeable
• Consult a bankruptcy attorney for analysis

PART IX — PRACTITIONER REFERENCE GUIDE

A. Key Statutory Provisions

B. Key IRM Sections

C. Key IRS Forms

D. Online Resources

E. Practice Tips

1. Use Online Payment Agreement (OPA): For streamlined agreements, applying online reduces the user fee and speeds processing. Go to irs.gov/opa.

2. Direct Debit Saves Money: Direct debit installment agreements (DDIAs) have lower user fees and reduce the risk of default. They are required for streamlined agreements between $25,001 and $100,000.

3. Check IRS Standards Before Proposing Payment: For non-streamlined agreements, the IRS will compare the taxpayer's expenses to National Standards (food, clothing, housekeeping, personal care) and Local Standards (housing, transportation). Propose a payment amount consistent with these standards.

4. File All Returns First: The IRS will not approve an installment agreement if the taxpayer has unfiled returns. Ensure all required returns are filed before submitting the request.

5. Calculate the CSED: The Collection Statute Expiration Date is critical for determining whether a streamlined IA or PPIA is appropriate. Request account transcripts to verify assessment dates.

6. Consider Penalty Abatement: If the taxpayer qualifies for First Time Abatement (FTA) or reasonable cause abatement, request penalty reduction before or simultaneously with the IA request to reduce the total balance.

7. PPIA Biennial Review: If entering a PPIA, advise the taxpayer that the IRS will review financial information every 2 years. The taxpayer should maintain records and be prepared for updated financial disclosure.

8. Avoid Default: Default is the most common problem with installment agreements. Set up direct debit, calendar payments, and ensure the taxpayer understands the obligation to file future returns and pay current taxes.

9. Trust Fund Taxes: For business taxpayers with trust fund tax liabilities (employment taxes), ensure current deposits are being made. The IRS is unlikely to approve an IA if the taxpayer continues to accrue new trust fund tax liabilities.

10. Lien Considerations: For balances over $25,000, the IRS will generally file a Notice of Federal Tax Lien. If the taxpayer pays the balance below $25,000, the lien may be withdrawn. Consider negotiating lien withdrawal as part of a streamlined DDIA.

PART X — TAXPAYER DECLARATION AND SIGNATURE

I, [________________________________], declare under penalties of perjury that the information contained in this Installment Agreement Request and all attached documentation is true, correct, and complete to the best of my knowledge and belief.

I understand that:

1. The IRS may file a Notice of Federal Tax Lien during the installment agreement period.
2. Interest and penalties will continue to accrue on the unpaid balance.
3. I must continue to file all required tax returns and pay all taxes due while the agreement is in effect.
4. Failure to comply with the terms of the agreement may result in default and termination.
5. The IRS may modify or terminate the agreement upon 30 days' written notice if my financial condition significantly changes or if I fail to comply with the terms.
6. For PPIAs, the IRS will review my financial condition every 2 years and may adjust the payment amount.

Signature: [________________________________]

Printed Name: [________________________________]

Date: [__/__/____]

SOURCES AND REFERENCES

1. Internal Revenue Code §§ 6159, 6331(k), 6502, 6601, 6621, 6651(h), 7122, 7803(c)
2. Treasury Regulation § 301.6159-1
3. IRM 5.14 (Installment Agreements), 5.15.1 (Financial Analysis), 5.1.9 (Collection Appeal Rights)
4. IRS Form 9465 Instructions (Rev. July 2024)
5. IRS Publication 594, The IRS Collection Process
6. IRS.gov, Payment Plans; Installment Agreements
7. 11 U.S.C. § 523(a)(1) (Bankruptcy Code — nondischargeable tax debts)

This template is provided for informational purposes only and does not constitute legal advice. You must have this template reviewed and customized by a qualified attorney licensed in your jurisdiction before use. Do not use this template without professional legal review. Tax laws, IRS procedures, and user fee amounts are subject to change; verify all information before filing.