If you owe back taxes to the IRS, you may be wondering if you can set up more than one installment agreement to pay off your debt. The short answer is yes, but it`s important to understand the rules and restrictions surrounding multiple agreements.
First, it`s important to note that the IRS may not allow you to set up a new installment agreement if you are already in default on a previous agreement. If you have missed payments or failed to file tax returns while on an existing installment plan, you may not be eligible for a new agreement.
Assuming you are not in default, you can apply for a new installment agreement if you owe additional taxes or if your financial situation has changed. However, keep in mind that each agreement will come with its own fees and interest charges. You may be required to pay a set-up fee for each agreement, as well as an ongoing fee to cover processing and administration costs.
Additionally, the IRS will consider your ability to pay when approving a new installment agreement. If you already have a large monthly payment on an existing agreement, you may not be able to afford a second one. The IRS will review your income, expenses, and assets to determine how much you can reasonably afford to pay each month.
It`s also important to note that the IRS may require you to prioritize certain tax debts over others. For example, if you owe both federal income tax and payroll tax, the IRS may require you to pay off the payroll tax first before setting up a new agreement for the income tax.
In summary, it is possible to have more than one installment agreement with the IRS, but there are several factors to consider. You must not be in default on any existing agreements, you will need to pay additional fees and interest charges, and your ability to pay will be closely scrutinized. If you are considering a new installment agreement, it may be helpful to consult with a tax professional to ensure that you understand all of the rules and requirements.