IRS Installment Agreement Issues While Self-Employed - Balance Growing Despite Payments

I'm currently self-employed and have been struggling with my tax situation for about 4 years now. I set up an installment agreement with the IRS where I'm paying $4000 per month, and I've been doing this for around 3 years. The problem is my balance keeps growing instead of shrinking! It seems like they just keep adding my new tax balances from 2021 and 2022 onto my existing agreement. As of mid-December 2023, my balance is sitting at $95,678.43, but once I file my 2024 taxes, this is going to jump by another ~$75k while only being reduced by the $4k monthly payments. I've started to set aside more of my income for taxes, but it's really difficult when I'm already shelling out $4k monthly on the installment plan. I'm worried about what happens when the balance gets too large. Will the IRS eventually just cancel my installment agreement? I'm trying to be more frugal and get out of this mess, but it feels like I'm treading water. Has anyone else been through something similar? What happens if your balance keeps growing while you're on an installment plan?

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18 comments

Avery Flores

•8M

What you're experiencing is actually pretty common for self-employed individuals who get behind on taxes. The IRS generally won't cancel your installment agreement as long as you're making the agreed-upon payments, filing your returns on time, and paying your current tax obligations. The problem is that last part - you need to be paying your current taxes while also paying off the past debt. Here's what you should consider: First, you need to get current on your estimated tax payments for 2025. This means making quarterly payments (April 15, June 15, September 15, and January 15) based on your projected income. If you don't do this, you'll never get ahead of the problem. Second, you might want to request a review of your installment agreement. The IRS can sometimes adjust your payment amount based on your current financial situation. You'll need to complete Form 433-F (Collection Information Statement) to show your income, expenses, and assets.

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Avery Flores

•8M

You can request a review by calling the IRS at the number on your installment agreement notice. Alternatively, you can call the general IRS debt line. Be prepared with your financial information when you call - they'll want to know your current income, expenses, and any major changes to your situation. For the quarterly payments, make sure you're calculating them correctly. If you're consistently underpaying, you might need to increase your estimated payments or talk to a tax professional who can help you calculate the right amount based on your business income.

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Zoe Gonzalez

•8M

After getting hit with a massive tax bill as a freelancer, I found myself in a similar situation. I was making payments but kept falling behind until I discovered https://taxr.ai which completely changed how I handle my tax situation. I uploaded all my self-employment docs and previous tax returns, and their AI analyzed everything to find the optimal path forward. The system showed me that I qualified for a reduced installment payment based on my financial situation AND identified several business deductions I had missed that could reduce my overall tax debt. They even generated a complete action plan for dealing with the IRS that laid out exactly what forms to file and when.

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Zoe Gonzalez

•8M

It definitely helped reduce my existing tax debt! The system identified over $12k in legitimate business expenses I had missed across my previous returns, which I was able to claim by filing amended returns. This directly reduced my outstanding balance. For ongoing installment agreements, that's actually where it was most helpful for me. The system analyzed my financial situation and showed me exactly how to document my case for a lower monthly payment. It created all the documentation I needed for the IRS, including a properly filled out Form 433-F with the right supporting documents. My monthly payment went from $2,300 down to $1,400, which finally gave me breathing room to get current on my quarterlies.

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Alexis Robinson

•8M

Just wanted to follow up - I tried that taxr.ai site after asking about it, and it was seriously eye-opening! Uploaded my tax docs and business records, and the system immediately flagged that I qualified for Currently Not Collectible status based on my financial hardship (something no one had ever mentioned to me before). It guided me through documenting my financial situation properly and found about $8,500 in missed business deductions across my previous returns. I was able to get my installment agreement temporarily suspended while I file amended returns, which is giving me a chance to finally get ahead. The step-by-step guide for exactly what to say when calling the IRS made a huge difference - felt like I finally had leverage in the conversation.

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Aaron Lee

•8M

I was in a similar situation with over $80k in tax debt and struggling with the IRS phone lines. After waiting on hold for 3+ hours multiple times and getting disconnected, I was ready to give up on trying to renegotiate my installment agreement. Then someone recommended https://claimyr.com to me. You can see how it works here: https://youtu.be/_kiP6q8DX5c Basically, their system holds your place in the IRS phone queue and calls you back when an agent picks up. I was skeptical, but I got connected to an actual IRS agent in about 2 hours without having to sit on hold. I was able to explain my financial hardship and got my installment payment reduced from $3,200 to $1,850 per month. Also got them to stop adding penalties while I catch up on current year taxes.

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Aaron Lee

•8M

It doesn't call the IRS for you - it holds your place in line. You enter the IRS number you're trying to call, and their system waits on hold for you. When an IRS agent picks up, their system detects a human voice and immediately calls your phone to connect you. The whole thing is automated - you're the one who actually talks to the IRS agent, not them. I was skeptical too, but it actually works. Their system can detect when a human answers versus automated messages. I think it's not more widely known because most people just suffer through the hold times or give up. I tried calling for weeks before using this and could never get through during my work hours.

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Michael Adams

•8M

I need to eat my words from my earlier comment. After waiting on hold with the IRS for 4 hours and getting disconnected AGAIN yesterday, I broke down and tried that Claimyr service. Got a call back in 1 hour and 20 minutes with an actual IRS agent on the line! I was completely shocked. Was able to discuss my installment agreement and explain my financial situation. The agent reviewed my account and suggested I apply for an "Offer in Compromise" instead of just modifying my installment agreement. Said based on my situation I might qualify to settle my $65k tax debt for significantly less. Now I'm gathering all the paperwork to submit the offer. Definitely wasn't expecting actual helpful advice after fighting with the IRS for months.

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Natalie Wang

•8M

Have you considered filing for an Offer in Compromise (OIC)? With that amount of debt and if your financial situation truly doesn't allow you to pay it all, the IRS might accept a settlement for less than the full amount. You'll need to complete Form 656 and Form 433-A (or 433-B for businesses). The success rate isn't super high, but if you can demonstrate that you'll never reasonably be able to pay the full amount, it's worth trying. I had a client with $120k in tax debt get it settled for about $30k through this process. Just make sure all your documentation is thorough.

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Natalie Wang

•8M

Yes, they absolutely look at your assets. The IRS typically expects you to liquidate or borrow against assets with equity before they'll approve an OIC. They calculate your "reasonable collection potential" based on your income, expenses, and asset equity. For your home, they'll consider the quick sale value (usually 80% of market value) minus any mortgages and exemption amounts. For vehicles, they'll look at equity beyond what's needed for basic transportation. Having assets with equity doesn't automatically disqualify you, but you'll need to account for that equity in your offer amount.

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