How to Revoke, Modify, or Default on an IRS Installment Agreement

Quick summary

This guide explains how to revoke (terminate), modify (change), or default (fail to comply with) an IRS installment agreement. It covers when and how to act, what documentation the IRS typically requires, likely consequences of default, and practical steps to reduce collection risk. Advice here is educational; consult a tax professional for tailored guidance.

(Authority: IRS, “Installment Agreements” — https://www.irs.gov/payments/installment-agreements and IRS newsroom resources on revocation and modification.)

When and why taxpayers change or end installment agreements

Life changes — job loss, medical bills, or sudden drops in income — often force taxpayers to revisit payment plans. Taxpayers may seek to revoke (end) an agreement if they can pay in full or decide to use a different collection strategy. Modifications are common when monthly payments become unaffordable. Default can happen unintentionally when a payment is missed, a required return is not filed, or direct debit fails.

In my practice as a CPA, I’ve seen two common patterns: (1) taxpayers proactively request a lower payment or extended term after an income shock, and (2) taxpayers who default without notifying the IRS face faster escalation to enforced collection (liens or levies). Open communication with the IRS materially improves outcomes.

How to revoke (end) an IRS installment agreement

What it means: Revoking an agreement is terminating the plan. The taxpayer or the IRS can end an installment agreement.

How to request revocation as a taxpayer:

• Pay the remaining balance in full — the fastest way to terminate the agreement. If you can’t pay in full, consider other options below.
• Contact the IRS Collections unit assigned to your case or call the IRS at the number on your notice to request termination. The IRS may require written confirmation or updated financial information.
• File a written request if instructed by the IRS. Keep all correspondence and proof of delivery.

When the IRS revokes an agreement:

• The IRS can revoke if you miss payments, fail to file required returns, or violate terms (such as failing to comply with a required financial disclosure).
• Revocation typically restarts collection activity; interest and penalties keep accruing and enforcement actions (liens or levies) may resume.

IRS references: Use the IRS Installment Agreement pages and the Online Payment Agreement tool for status checks and actions (https://www.irs.gov/payments/installment-agreements).

How to modify an existing installment agreement

Reasons to modify: Reduced income, increased expenses, or new information about ability to pay.

Common modification paths and steps:

1. Review your current agreement and recent IRS notices. Note the payment amount, due date, and any requirements such as Direct Debit.
2. Gather documentation: recent pay stubs, bank statements, and a completed Collection Information Statement (Form 433‑F) if requested. Form 433‑F provides the IRS with current income, living expenses, and asset details (https://www.irs.gov/forms-pubs/about-form-433-f).
3. Request a modification:

• Online: If eligible, use the IRS Online Payment Agreement tool to request changes or a new plan. See our guide on how to request an installment agreement online for practical steps and screenshots (How to Request an Installment Agreement Online).
• By phone: Call the contact on your IRS notice or the general collections number and ask to speak to your assigned caseworker.
• In writing: Send a letter with updated financial details and the reason for the requested change.

1. Consider a Direct Debit Installment Agreement (DDIA) — it often reduces user fees and reduces the chance of default due to missed payments. Learn more about the benefits of direct debit in our glossaries on Direct Debit Installment Agreements.

What the IRS looks for: The IRS will evaluate ability to pay, timeliness of prior payments, compliance with filing requirements, and whether a proposed timeline will collect the tax in a reasonable time.

Partial-payment installment agreements (PPIA): If you cannot pay the full balance during the collection statute period, the IRS may accept a PPIA after full financial disclosure (see our article on How to Negotiate a Partial Payment Installment Agreement). Expect to provide Form 433‑F or a similar financial statement.

What constitutes a default and immediate consequences

Default triggers:

• Missed payment(s) under the agreed schedule.
• Failure to file required tax returns while under agreement.
• Violation of any written terms (for example, not switching to direct debit if the agreement requires it).

Immediate and downstream consequences:

• Penalties and interest continue to accrue on the unpaid tax balance.
• The IRS may revoke the installment agreement and resume enforced collection, including filing a Notice of Federal Tax Lien or issuing levies against wages, bank accounts, or other assets (IRS: collection enforcement policies).
• If a taxpayer has a Direct Debit installment and a bank rejects withdrawal, the IRS typically treats that as a missed payment and will contact the taxpayer; repeated failures increase default risk.

Practical note from my practice: The IRS moves faster on enforced collections when a taxpayer is out of compliance with filing obligations. Stay current with tax filings even if you cannot pay.

Steps to recover from a default or avoid escalation

1. Act immediately. Contact the IRS or your assigned revenue officer as soon as you miss a payment or receive a default notice.
2. Bring payments current when possible. Paying the missed amounts and any associated fees often restores the agreement.
3. Request reinstatement or modification. If you can’t pay missed installments, ask to renegotiate. Provide current financial documents (pay stubs, bank statements, Form 433‑F).
4. Consider third-party assistance. A CPA, enrolled agent, or tax attorney can negotiate on your behalf; they often reduce stress and avoid unnecessary enforcement action.
5. If the IRS has filed a lien or issued a levy, you may request a Collection Due Process hearing or pursue an Offer in Compromise if eligible — these are separate processes with specific requirements.

IRS resources: The Online Payment Agreement portal and the IRS collection forms pages; for offers in compromise, consult IRS Publication 908 and the offer pages on IRS.gov.

Documentation checklist (what to have ready)

• Last 2–3 pay stubs or business profit/loss statements
• Recent bank statements (30–90 days)
• Copies of filed and unfiled tax returns
• Completed Form 433‑F or Form 433‑A if requested (collection information)
• Any correspondence from the IRS (notices, CP numbers)
• Proof of special circumstances (medical bills, layoff notice)

Examples: what I’ve seen work

• Example 1: A single parent with medical debt switched from a monthly payment of $300 to $150 after completing Form 433‑F and documenting expenses. The IRS approved a reduced payment temporarily until income recovered.
• Example 2: A small business owner missed two payments but called the assigned revenue officer and provided updated bank statements. The IRS allowed a short-term repayment plan and reinstated the agreement after the taxpayer paid the arrears.

These outcomes depend on documentation quality and timely communication.

Common mistakes to avoid

• Waiting to contact the IRS after a missed payment. Early contact significantly improves outcomes.
• Assuming a payment plan is permanent. Terms can change; keep records and stay current with filings.
• Not using direct debit when it’s available — DDIA reduces missed payment risk and may reduce user fees.

Frequently asked questions

• Can the IRS revoke my agreement automatically? Yes—if you miss payments, fail to file returns, or otherwise violate the agreement, the IRS can revoke the plan and resume collection actions.
• Can I modify my agreement more than once? Yes. You may request additional modifications if financial circumstances change, though you should be prepared to document those changes.
• Does interest stop under an installment agreement? No. Interest and penalties generally continue to accrue until the tax is paid in full.

Internal resources and further reading

• Setting up an installment plan: Setting Up an IRS Installment Agreement
• Online requests: How to Request an Installment Agreement Online
• Negotiating partial payments: How to Negotiate a Partial Payment Installment Agreement

Professional disclaimer

This article is educational and does not replace personalized tax advice. For help with your specific circumstances, consult a licensed tax professional (CPA, enrolled agent, or tax attorney) or contact the IRS directly. The IRS is the authoritative source for federal tax procedures.

Authoritative sources

• IRS — Installment Agreements: https://www.irs.gov/payments/installment-agreements
• IRS — About Form 433‑F: https://www.irs.gov/forms-pubs/about-form-433-f
• IRS — Online Payment Agreement and collection guidance: https://www.irs.gov/payments

(Information above verified against IRS guidance as available on IRS.gov as of 2025.)