When you call the IRS to set up an installment agreement, you may have to go through a series of steps before the IRS will grant your installment agreement. The first factor is how much money do you owe the IRS. While the amount you owe does not matter when negotiating an offer in compromise, it is critical for several reasons when negotiating an installment agreement.
If you owe the IRS less than $10,000 and your installment agreement will allow you to pay off your debt within three years, the IRS must grant your request for an installment agreement. If you owe less than $25,000 in taxes, penalties and interest, the IRS will not require you to provide a financial statement (Form 433-F) prior to setting up an installment agreement. However, if you cannot afford to pay the monthly installment agreement as the IRS would like then you would be forced to provide a financial statement showing that you cannot afford to pay what they are asking. Finally, if you owe more than $25,000 the IRS is required to get a financial statement from you. It would do you well to hire an attorney to assist you with filling out a financial statement when you owe over $10,000 if you need assistance negotiating a lower payment because typically, the IRS will not allow more than the "national standard" on living expenses such as housing, utilities, food, clothing and transportation. A professional that deals with the IRS on a daily basis will know how to best help you get the lower payment that you desire. If you are going to be required to give them a Financial Statement, I would prepare one prior to getting on the telephone with them and strictly go by your form. The IRS uses Form 433-F in these situations. You also want to write down what the Revenue Officer is allowing you if he states that he is not allowing the entire amount.
The amount you owe will determine exactly how much time it will take to get the ball rolling. If you are only calling to set up a payment plan and you owe a few thousand dollars, an hour on the telephone should be sufficient to set up your installment agreement. However, if you owe more than $25,000 you will be required to go through the financial statement on the telephone then mail or fax in the substantiating documents such as pay stubs, bank statements and copies of your utility bills, etc.
At this point, the IRS will give you a short deadline in order to provide those documents (if you have them prepared already, the revenue officer may allow you to fax them directly to her) then the IRS will review the documents prior to approving your installment agreement. The process has taken from several hours up to several months in order to get the review finished.
You can see that there really is no set time limit, however, it may be easy to predict how long it will take based on the surrounding facts of your situation.