How Long Does It Take to Get an IRS Repayment Plan?

How Long Does It Take to Get an IRS Repayment Plan?

• May 29, 2022

When you’re in debt to the IRS, settling that debt as quickly as possible is extremely important. But if you’re unable to pay what you owe and you need to apply for an IRS payment plan, those things do take time. Just how much time it takes will depend on the type of IRS repayment plan you’re hoping to receive, how quickly you apply, and how much you owe. Keep reading to learn more about the average amount of time it takes to be approved for one of these tax debt repayment options.

Extension of Time to Pay

The simplest and fastest type of repayment plan to the IRS is called an extension of time to pay, also known as a short-term repayment plan. This gives you up to 120 days to pay what you owe to the IRS. You can apply for one of these very quickly online; just as with applying for an extension of time to file a tax return, an extension of time to pay can be requested in about 15 minutes, and is approved almost instantly in most cases.

Of course, there are always exceptions to this. The main one here is that an extension of time to pay is only for your current tax debt. So, if you filed your 2021 return and owe a large amount, you can request this type of extension. However, if you owe back taxes from previous years, you will need to settle those first; otherwise, your extension request will most likely be rejected.

Long-Term Payment Plan

A long-term payment plan is an option available to those who have back taxes that they need to pay off. These plans may also be referred to as simple payment plans or installment agreements. As that last name implies, an IRS installment agreement requires you to make regular payments to the IRS every month to help pay off your tax debt in no more than six years. If you owe between $25,000 and $50,000, you will be required to set up direct debit or payroll deduction for those installment payments; otherwise, the IRS may file a tax lien.

If you owe more than $50,000, but less than $100,000, you can still qualify for a long-term payment plan, but the IRS will file that tax lien in addition to requiring the direct debits or payroll deductions. If you can’t pay in this way, you’ll need to add an additional one to two months to your set-up timeline, as the IRS will require a great deal of financial information to set up payments by check. For tax debts in this range, you usually have up to seven years to fully settle the debt.

Again, requesting these online can be quite fast, but only if you know what you’re doing. If you fill out the application incorrectly, your request will be rejected and you’ll need to start over. Additionally, if you’ve had an installment agreement before, you will most likely have to set up the agreement by phone, which can take longer. To set up those direct debits or payroll deduction and avoid a lien filing, you should anticipate an additional four to six weeks to set up your payment plan.

Currently Not Collectible Status

While setting your account to a Currently Not Collectible status doesn’t settle your tax debt or put you on a repayment plan, it can stop collection attempts. If you’re currently experiencing a financial hardship and need a temporary reprieve from collection attempts on your tax debt, a CNC status can help, but it takes time to set it up. It’s best to do this by phone, as they need a great deal of financial information from you; make sure you know all of the financial information you’ll need to provide to the IRS for your request, and have it on hand when you call. Requesting by mail takes one to two months for the initial review, and then they may request more documentation. Jumpstarting the process over the phone can speed up the timeline.

Offer in Compromise

An offer in compromise (OIC) takes several months to set up, as the IRS needs to thoroughly review all of your financial information, as well as your application packet and offer amount for settling your tax debt. If you owe less than $50,000, expect the process to take between four and six months. If it’s over this amount, anticipate between seven months and one year. All OICs must be completed within two years of the IRS receiving the OIC application.

The Best Time to Start Is Now

Regardless of which type of repayment plan you’re hoping for, the best thing to do is to start the application process now. The sooner you start, the sooner you can get back to a life free from tax debt. Use the link on our homepage to find out what settlement options and payment plans you qualify for in minutes!