Yes, the IRS lets you pay what you owe over time instead of all at once
If you owe the IRS money and cannot pay the full amount by the tax deadline, you can request a payment plan (called an installment agreement) that lets you pay in monthly installments. The IRS offers several types of plans depending on how much you owe and your situation. Setting up a plan stops the IRS from taking collection action against you while you are making payments, though interest and penalties continue to grow on the unpaid balance.
You can request a plan before you file, when you file, or after you receive a bill. The sooner you set one up, the sooner you stop accumulating failure-to-pay penalties. You do not have to wait for the IRS to contact you first.
Key Takeaways
- The IRS offers short-term plans (120 days or fewer) with no setup fee, and long-term plans (more than 120 days) with setup fees ranging from $31 to $225 depending on how you set it up.
- You can request a plan online through IRS.gov, by phone at 1-800-829-1040, or by mail using Form 9465, and approval usually takes a few days to a few weeks.
- Monthly payments on a long-term plan are typically $25 to $200 or more, depending on what you owe and how long you want to spread payments over.
- Interest and penalties continue to accrue on your unpaid balance, so the longer your plan runs, the more you will owe in total.
- If you miss a payment or fall behind on your taxes again, the IRS can end your plan and resume collection action.
Types of payment plans and what each one costs
The IRS offers two main categories: short-term plans and long-term plans. A short-term plan is for balances you can pay off within 120 days. There is no setup fee, and you simply tell the IRS when you will pay. A long-term plan is for anything that takes more than 120 days to pay off.
Long-term plans come in three versions. A standard installment agreement is the most common; you pay a fixed amount each month until the balance is gone. A payroll deduction agreement lets the IRS take payments directly from your paycheck. A streamlined installment agreement is available if you owe $50,000 or less and requires less paperwork and a lower setup fee.
Setup fees for long-term plans range from $31 to $225. The fee is lowest ($31) if you set up the plan online or through payroll deduction, and higher ($225) if you set it up by phone or mail. Some people in financial hardship may have the fee reduced or removed; you can request this when you set up the plan.
How to request a payment plan online, by phone, or by mail
The fastest route is IRS.gov. Go to the IRS Online Payment Agreement tool, answer questions about your income and what you owe, and you will get approval or a decision within minutes. You can set up a plan for balances up to $50,000 this way. The setup fee is $31 if you choose payroll deduction or $225 if you pay by check or bank transfer.
If you owe more than $50,000 or prefer to talk to someone, call the IRS at 1-800-829-1040 during business hours (Monday through Friday, 7 a.m. to 7 p.m. your local time). Have your Social Security number, tax year, and a rough idea of what you can pay each month ready. The IRS representative will walk you through the options and set up the plan over the phone. The setup fee is $225 unless you choose payroll deduction ($31).
You can also mail Form 9465 (Installment Agreement Request) to the IRS address shown in your tax notice. Include a statement of your financial situation if you want to request a fee reduction. Mail takes longer — expect 30 days or more for a response — but it is an option if you do not have internet access or prefer a paper trail.
What happens after you request a plan
If you request online, you usually get an answer within minutes. If you call or mail, approval typically takes a few days to a few weeks. Once approved, the IRS will send you a notice with the payment amount, due date each month, and the account number for your plan.
You must make your first payment by the date shown in the notice. After that, payments are due on the same day each month. You can pay by automatic bank withdrawal (which lowers your setup fee), by check, by credit or debit card (though there is a processing fee), or through the IRS payment portal.
While you are on a payment plan, the IRS will not take collection action such as wage garnishment or bank levy. However, interest and penalties continue to accrue on the unpaid balance. The longer your plan runs, the more interest you will pay. For example, a $5,000 balance at current IRS interest rates (around 8 percent annually) will cost you roughly $400 in interest over a year, plus penalties.
How much your monthly payment will be
Your monthly payment depends on three things: what you owe, how long you want to spread payments over, and whether you choose a standard or streamlined plan. The IRS does not set a minimum payment amount, but most people pay between $25 and $200 per month.
If you set up a plan online or by phone, you can choose how long you want to pay. For example, if you owe $3,000, you might pay $100 a month for 30 months, or $150 a month for 20 months. The longer the plan, the more interest you pay overall. If you cannot afford the payment the IRS suggests, you can ask for a lower amount, though this extends the plan and increases total interest.
If you are in financial hardship, you may be able to request a Currently Not Collectible status instead, which pauses collection action for a time while you get back on your feet. This is different from a payment plan and requires a separate request.
What to do if you miss a payment or your situation changes
If you miss a payment, contact the IRS as soon as possible. A single missed payment does not automatically end your plan, but the IRS may send you a notice. If you miss payments repeatedly or fall behind on new tax bills, the IRS can terminate your plan and resume collection action such as wage garnishment or levy.
If your financial situation improves and you can pay faster, you can pay extra toward your balance at any time without penalty. If your situation gets worse and you cannot afford your monthly payment, contact the IRS to modify your plan. You can request a lower payment, a longer timeline, or a different type of plan. The IRS may ask for updated financial information.
If you set up a payroll deduction agreement and change jobs, your plan continues but the deduction stops. You will need to contact the IRS to restart payroll deduction with your new employer, or switch to a different payment method.
How payment plans affect your credit and taxes
Having a payment plan with the IRS does not directly hurt your credit score, because the IRS does not report to credit bureaus. However, if the IRS filed a tax lien (a public claim against your property) before you set up the plan, that lien stays on your credit report and does affect your score. Once you pay off the plan in full, you can request that the IRS release the lien, which improves your credit over time.
While you are on a payment plan, you must file your tax return on time each year and pay any new taxes owed. If you do not, the IRS can end your plan. If you are due a refund in a future year, the IRS will apply it to your plan balance instead of sending it to you, until the plan is paid off.
Frequently Asked Questions
Can I set up a payment plan if I have not filed my tax return yet?
Yes. File your return as soon as you can, even if you cannot pay. Once you file, you can request a payment plan. If you file late, you will owe failure-to-file penalties on top of the tax, so filing quickly matters. You can request a plan before or after you file.
What if I owe more than $50,000?
You can still set up a plan, but you cannot do it online. Call 1-800-829-1040 or mail Form 9465 to request a long-term plan. The IRS will work with you to set up a payment schedule based on your income and what you can afford. Balances over $50,000 may require more detailed financial information.
Can the IRS take my tax refund if I am on a payment plan?
Yes. While you are on a payment plan, any refund you receive in future years will be applied to your plan balance instead of sent to you. This continues until the plan is paid off. If you need the refund for living expenses, contact the IRS to discuss your options.
What happens if I pay off my plan early?
You can pay off your balance at any time without penalty. Once you pay in full, your plan ends. If the IRS filed a tax lien, you can request that it be released, though this may take a few weeks. You will still owe any interest and penalties that accrued during the plan.
Is there a way to lower my monthly payment if I cannot afford it?
Yes. Contact the IRS and request a modification to your plan. You can ask for a lower payment, which extends the timeline and increases total interest. If you are in severe financial hardship, ask about Currently Not Collectible status, which temporarily pauses collection action while you stabilize.