Managing Multiple IRS Payment Plans: What You Need to Know

You’ve been paying off your IRS debt through a payment plan, but then another tax bill shows up. Now you’re overwhelmed with juggling expenses and multiple tax debts, feeling certain that paying off the IRS is impossible. Sound Familiar?

You might wonder, can you have multiple IRS payment plans?

That’s the answer we’ll help you find.

Read along to know how many IRS payment plans can you have, including installment agreements, and learn the rules governing them.
Check-Out: Effective Strategies: How to Remove IRS Penalties & Interest

How to Set Up a Payment Plan with the IRS?

Setting up a plan to avoid severe penalties, like an IRS bank levy easier than you think.

• Check Your Eligibility: You can qualify for either a short-term or long-term payment plan based on the amount you owe.
  
• For a short-term plan, you must owe less than $100,000, and for a long-term installment agreement, the limit is $50,000 in combined taxes, penalties, and interest​.
• Choose the Plan Type:
  • Short-Term Plan: Pay off your balance within 180 days.
    
  • Long-Term Plan (Installment Agreement): Make monthly payments over a longer period, typically up to 72 months​.
• Apply for the Payment Plan: Reach out to an IRS consultant to set up your payment plan, as they know how the IRS thinks.
• Submit Financial Information: You’ll need your bank account details to set up direct debit payments. If you owe more than $25,000, direct debit is required​.

How Many IRS Payment Plans Can You Have?

The IRS only permits a single active payment plan for all your debts. So, if you’ve been asking, “Can you have 2 installment agreements with the IRS?” It is no. They only permit one.

This means that if you owe taxes for multiple years or different types of tax (like personal income tax and business taxes), they’ll usually combine all your outstanding balances into one installment agreement.

The IRS simplifies things by consolidating your debts into a single installment plan, helping you avoid the hassle of managing multiple payments. This can be especially helpful if you’re worried about deadlines and asking, “How long do you have to file taxes?”

Also Read: IRS Tax Debt Settlement Help

Managing Multiple IRS Payment Plans

Let’s say you have a payment plan already in place but then receive a new tax bill. Here’s what you can do:

1. Request a Modification: Contact the IRS to update your current payment plan to include the new amount you owe. This way, you won’t have separate payments to track.
   
2. Set Up a New Agreement: Modifying your installment plan may not be possible if it exceeds debt limits or if your financial situation has significantly changed. In these cases, canceling the current plan and setting up a new one is often necessary.
   
3. Seek Professional Guidance: Tax laws and IRS procedures can be tricky. Consulting with a tax professional can save you from potential pitfalls and help you find the best approach for your unique situation.
   

IRS resolution experts always say that a successful IRS tax audit defense can prevent new liabilities from being added to your existing payment plans, making it easier to manage your financial obligations. So, while you can, get the right help and prevent your tax liabilities permanently.

Also Read: How do I find out if I owe back taxes?

Rules for Multiple IRS Payment Plans

The IRS is pretty clear about their rules for payment plans:

• One Agreement at a Time: You can only have one active agreement.
  
• Combining Debts: All your tax debts will be combined under a single agreement.
  
• Minimum Monthly Payments: The IRS will set a minimum monthly payment amount based on your total debt.
  
• Avoiding Default: Missing a payment or failing to meet your agreement can lead to default, which may result in harsh penalties like wage garnishment or property liens.

What to do if You Need More Than One Payment Plan?

If you’re struggling to cover multiple tax debts under one plan, consider these steps:

1. Consolidate Your Debts: Contact the IRS to see if you can combine all your outstanding debts into one manageable monthly payment.
   
2. Professional Help: A tax professional can negotiate with the IRS on your behalf, possibly securing a lower monthly payment or a different repayment term.
   
3. Offer in Compromise: If you genuinely can’t afford the consolidated payments, you might qualify for an Offer in Compromise, which lets you settle your debt for less than the full amount owed.

Also Read: How much does tax resolution services cost?

Take Action Before the IRS Does!

Failing to pay overdue taxes can lead to serious consequences initiated by the IRS. They may begin collection actions, including placing a federal tax lien on your assets and property, which secures their claim to the taxes owed.

Additionally, the IRS can garnish your wages, meaning they will take a portion of your paycheck directly. In more severe cases, they can levy your bank accounts, seizing and liquidating funds from your financial accounts to cover the debt.

The IRS also has the authority to pursue criminal charges for tax evasion, which could result in fines or imprisonment. Taking action to address unpaid taxes is crucial to avoid these severe repercussions.