What IRS Form 2159 (2024) Is For
IRS Form 2159 (2024) is used to establish a payroll deduction agreement that allows the Internal Revenue Service to receive regular payments for a taxpayer’s federal income tax debt directly from employee wages. The form authorizes an employer to withhold a set amount from each paycheck, which helps wage earners and employees pay taxes they owe in a structured way that supports compliance and reduces the risk of missed payments.
For a complete look at IRS payment plan options—including payroll deduction agreements and other installment plans—see our detailed payment plans guide.
When You’d Use IRS Form 2159 (2024)
This section outlines the circumstances under which taxpayers may determine that a payroll deduction agreement is the most practical payment plan available.
- You need a predictable installment agreement: This option works when you want consistent payroll deductions that reduce your tax liability over time through payments automatically withheld from your paycheck.
- Your employer agrees to participate: This form is appropriate when your taxpayer employer confirms that it can process payroll taxes withholding and forward the deductions to the Internal Revenue Service.
- You cannot manage direct debit payments: This form is suitable when electronic payments from a taxpayer's bank account are not feasible, which often applies to low-income taxpayers or individuals with limited funds available.
- A revenue officer instructs you to use this method: Some taxpayers receive a notice advising them to use payroll withholding to maintain compliance and avoid further collection actions.
- You owe income tax that you cannot pay immediately: Taxpayers use the form when they owe a balance after filing a tax return or after receiving a letter indicating that taxes remain unpaid.
- You want to avoid new penalties and interest growth: A payroll deduction agreement helps ensure that payments are deducted consistently so you can reduce additional costs relating to tax debt.
Employers can read about common payroll tax issues to understand their obligations when processing IRS payroll deduction agreements.
Key Rules or Details for IRS Form 2159 (2024)
These points outline the main requirements and limitations that guide how this payroll deduction agreement works.
- Have an agreement that fits within the limits: The Internal Revenue Service requires that payments satisfy the total amount owed within the allowed timeframe, so the balance can be fully paid without exceeding collection limits.
- Federal agencies must participate: Employees working for federal agencies are subject to laws that require their employers to honor payroll deduction agreements, ensuring compliance even when private employers may decline to do so.
- Low-income taxpayers may qualify: The IRS offers a lower user fee for qualifying individuals, which reduces the overall cost of setting up the agreement and may provide reimbursement once the debt is paid.
- Electronic payments are not required: Taxpayers who cannot use electronic payments or a direct debit installment agreement may use this form instead, especially when direct debit installment agreement options are not available.
- Interest and penalties continue to accrue until paid: The agreement does not prevent interest or penalties from accruing; therefore, taxpayers should determine a payment amount that reasonably limits long-term added costs.
If you qualify, you might seek penalty abatement for IRS payment plans to reduce additional costs.
Step-by-Step (High Level) for IRS Form 2159 (2024)
The following steps explain the general process of completing and submitting the payroll deduction agreement.
- Confirm employer willingness to participate: A taxpayer must verify that the employer is authorized and prepared to withhold wages before completing the forms, because payroll deductions cannot begin until the employer agrees.
- Determine the correct payment amount: Taxpayers should calculate a payment that allows the balance to be paid within IRS limits while still fitting personal expenses and other deductions in each paycheck.
- Complete the taxpayer section: The taxpayer fills out identifying details such as address, account information, employer identification number, and tax periods so the IRS receives accurate filing information.
- Have the employer complete their required section: Employers must enter payroll details, confirm withholding capabilities, and sign their part of the form so the deduction can be authorized for employee wages.
- Submit all required parts to the IRS: After completing the form, the employer mails the designated copy to the IRS according to the instructions so that the agreement can be reviewed and approved.
- Retain the taxpayer’s copy for personal records: Taxpayers should keep the taxpayer’s copy of the completed form to track payments and confirm compliance throughout the agreement.
- Watch for IRS notices confirming acceptance: The IRS will send a notice or letter once the agreement is approved, which allows the employer to begin withholding on the next appropriate payroll date.
- Begin making payments through payroll withholding: The employer deducts the authorized amount from each paycheck and forwards the money to the IRS, ensuring regular payments until the debt is fully paid.
Common Mistakes and How to Avoid Them
These common issues often explain why taxpayers and employers go wrong when setting up a payroll deduction agreement.
- Not confirming employer participation: Taxpayers can avoid delays by verifying that the employer agrees to process withholding before submitting the form to the IRS.
- Incorrect or incomplete payroll details: This mistake can be prevented by double-checking employer information, wages, and withholding amounts before sending the documents.
- Failing to stay current with tax return filing: Taxpayers can avoid default by filing every required tax return on time and maintaining compliance with all future tax obligations.
- Ignoring IRS notices or mail requests: This issue can be avoided by reading every notice or letter sent by the IRS and responding promptly when additional documents or updates are required.
- Allowing insufficient paycheck funds for deductions: Taxpayers can prevent missed payments by reviewing their expenses and ensuring that their wages will cover the deduction amount, along with other payroll deductions.
Stay in good standing by resolving unfiled tax returns before and during your payroll deduction agreement.
What Happens After You File IRS Form 2159 (2024)
After the form is submitted, the IRS reviews the agreement and sends a notice confirming approval or requesting additional details. Once approved, the employer initiates payroll deductions and forwards payments to the IRS, thereby reducing the balance over time. Interest and penalties continue until the debt is fully paid, and any refund may be applied to the remaining balance. The taxpayer must stay compliant with all filing requirements to keep the agreement active.
Use our IRS Account Transcript Service to monitor your payment progress and confirm IRS records are accurate.
FAQs
Can I use a payroll deduction agreement if my employer does not participate in the program?
No, your employer must agree to process withholding for IRS Form 2159 (2024), and if they decline, you must request a different installment agreement or payment method.
Does IRS Form 2159 (2024) stop interest or penalties from accruing?
No, interest and penalties continue until the full balance is paid, even when payments are made through a payroll deduction agreement.
Can self-employed individuals use IRS Form 2159 (2024)?
No, this form applies only to employees whose employer is authorized to withhold money from wages and forward payments to the IRS.
Does the IRS require direct debit when using this form?
No, IRS Form 2159 (2024) does not require direct debit because payments are made through employer withholding, rather than from a taxpayer’s bank account.
