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What to Do If You Default on Your IRS Payment Plan

IRS installment agreement default

When you owe money to the IRS, you can typically set up a payment plan.  But what happens if your financial situation changes before you’ve completed your payments, and you default on your plan?

Find out what to do if you default on your IRS payment plan, and how a tax attorney can help.

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Key Insights We Will  Discuss:

  1. What to do when you default on your IRS payment plan
  2. Consequences of defaulting on your payment plan
  3. How a tax attorney can help you explore options when you default on a payment plan

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Steps to Take When You Default on Your IRS Payment Plan

When you owe money to the IRS, you might not have enough cash on-hand to cover it.  In those cases, you can work with the IRS to set up a payment plan.  The IRS recommends calling the agency as soon as you default or when your financial situation changes to discuss your options.  One option can be reducing the amount of your monthly payment to an amount more affordable based on your current financial situation.  The IRS may ask you to submit proof of changes to your income or finances when making changes to your payment plan.

Consequences of Defaulting on Your Payment Plan

If you have an existing IRS payment plan, defaulting on payments can cause the IRS to terminate the plan.  Terminating this plan can result in the IRS taking collection actions, including imposing a tax lien.

The IRS typically waits about 60 days before terminating payment plans, but it can decide to terminate the agreement without notifying you.

The IRS can also end your payment plan if you accumulate another tax debt while you’re repaying the previous debt.  Even if you have been making regular payments, the IRS can still terminate the payment plan under these circumstances.

How a Tax Attorney Can Help

A tax attorney can help you determine the next steps when you default on your payment plan.

If you need to correct the default, you can consult with a tax attorney on how to pay the amount of the missed payments and how to reinstate the plan.  A tax attorney can also help you renegotiate the payment plan, which can include lowering your monthly payments and submitting information to show how your finances have changed.

An attorney can also help when you need to file an appeal to delay any collection measures the IRS might put into place.  An attorney can help review your options.

Contact an Attorney

If you default on your IRS payment plan, call Ayar Law at 800-571-7175 to receive free, no-obligation

Venar Ayar, Esq.

Venar Ayar, Esq.

Attorney-at-Law, Master of Laws in Taxation
Principal and founder, Ayar Law

Venar is an award-winning tax attorney ranked as a Top Lawyer in the field of Tax Law. Mr. Ayar has a Master of Laws in Taxation – the highest degree available in tax, held by only a small number of the country’s attorneys.