This is part two of a series of blogs on IRS payment arrangements. Most taxpayers utilize an installment agreement to pay their tax debt for obvious reasons. Such an arrangement allows monthly intermittent payments at an affordable amount, while addressing the issue with some forward resolution. The IRS charges a modest setup fee for an installment agreement.

Individual taxpayers must complete and mail Form 9465, Installment Agreement Request and Form 433-F, Collection Information Statement before entering into any installment agreement. Taxpayers then make monthly payments usually by direct debit or payroll deduction. Interests and late-payment penalties continue to accrue during the installment period, but the late-payment penalty is cut in half for any month an installment agreement is in effect.