The three ways to arrange an IRS payment plan
You can set up an IRS payment plan in three ways: online through the IRS website, by phone with an IRS representative, or by mail. The online route is fastest and requires no waiting on hold. The phone route takes longer but lets you discuss your situation with a person. The mail route is slowest but works if you have no internet access or prefer a paper record.
All three methods lead to the same outcome: a formal agreement with the IRS that lets you pay your tax debt in monthly installments instead of a lump sum. The IRS charges a setup fee (currently $31 to $225 depending on the method) and interest on the unpaid balance, but you avoid wage garnishment or bank levy as long as you stay current on your monthly payment.
Before you contact the IRS, you need your Social Security number, the tax year(s) you owe for, and the total amount owed. If you do not know the amount, you can find it on your most recent IRS notice or by logging into your IRS account online.
Key Takeaways
- The IRS Online Payment Agreement tool at IRS.gov lets you set up a plan in minutes without calling, and charges the lowest setup fee at $31.
- Short-term payment plans (120 days or fewer) have no setup fee, but require you to pay off the debt within four months.
- Long-term installment agreements (more than 120 days) charge a setup fee and interest but spread payments over years if needed.
- You must make your first payment by the due date shown in your agreement, or the plan will default and collection action will resume.
- If your circumstances change and you cannot make a payment, contact the IRS immediately to modify the plan rather than missing a payment.
Setting up a plan online through the IRS website
Go to IRS.gov and search for "Online Payment Agreement." You will land on a page with a button labeled "Apply Now." Click it and you will be taken to a secure form that asks for your Social Security number, date of birth, address, and the tax year(s) you owe for.
The system will calculate your balance and show you payment options. If you owe less than $50,000, you can choose a payment amount and a due date each month. The IRS will suggest a payment based on how long you want to take to pay off the debt. You can accept the suggestion or enter your own amount, as long as it is enough to cover interest and penalties while you pay down the principal.
Once you submit, the IRS issues your agreement immediately. You will receive a confirmation number on screen and an email with the full agreement details. Your first payment is due by the date shown in the agreement, usually 20 to 30 days from the date you set it up. You can pay online, by phone, or by mail using the payment instructions in your agreement.
Calling the IRS to arrange a payment plan by phone
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, the tax year(s) you owe for, and your total balance ready before you call. Wait times vary; during tax season (January through April) you may wait 30 minutes to an hour.
When you reach a representative, tell them you want to set up a payment plan. They will verify your identity, confirm the amount owed, and discuss your financial situation to determine what monthly payment you can afford. They will then offer you a plan with a specific payment amount and due date.
The representative will explain the setup fee and interest charges, and you can accept or decline the plan on the call. If you accept, they will issue a confirmation number and mail you a formal agreement within 5 to 7 business days. Your first payment is due by the date shown in the mailed agreement.
Sending a payment plan request by mail
If you prefer to handle this by mail, print Form 9465 (Installment Agreement Request) from IRS.gov, fill it out, and mail it to the IRS address shown in your most recent tax notice. Include a copy of that notice with your form.
On the form, you will enter your Social Security number, the tax year(s) you owe for, your total balance, and the monthly payment amount you propose. The IRS will review your request and mail you an agreement within 30 days. If they approve your proposed payment, your agreement will show that amount. If they think it is too low, they may counter with a higher amount or deny the request and ask you to call to discuss.
This method is slowest because the back-and-forth by mail can take 60 days or more. Use it only if you have no internet access and cannot call, or if you need a paper record for your own records before you commit.
Understanding setup fees and interest charges
The IRS charges a one-time setup fee when you enter a payment plan. The amount depends on how you set it up: $31 if you use the online tool, $225 if you call or mail a request. Some taxpayers with low income can request a reduced fee of $31 even when calling or mailing; ask the IRS representative or mention it on Form 9465 if your household income is below the current poverty line for your family size.
In addition to the setup fee, you owe interest on your unpaid balance. The interest rate is set by the IRS each quarter and is currently around 8 percent per year, though it changes. Interest accrues daily on whatever balance remains unpaid. This means that if you pay $500 per month on a $10,000 debt, you will pay more than $10,000 total because interest keeps adding to the balance.
You also owe penalties. If you filed late, you owe a failure-to-file penalty. If you did not pay by the original due date, you owe a failure-to-pay penalty. These penalties do not stop accruing once you enter a payment plan; they continue to add to your balance until you pay in full. The IRS may reduce or remove penalties if you have a reasonable cause for the late filing or payment, but you must request this separately.
What happens if you miss a payment or cannot afford your plan
If you miss a payment, the IRS will send you a notice. You have 30 days to make the missed payment before the IRS terminates your agreement and resumes collection action, which can include wage garnishment or bank levy.
If you know you cannot make a payment, do not wait for the due date to pass. Contact the IRS immediately at 1-800-829-1040 or log into your IRS account online to request a modification. You can ask to lower your monthly payment, extend the plan, or temporarily pause payments if you are facing a hardship. The IRS may grant a temporary pause (usually 30 to 120 days) if you can show that you are unable to pay due to circumstances beyond your control, such as job loss or medical emergency.
If your financial situation improves and you can pay more than your monthly amount, you can pay extra at any time without penalty. Extra payments go directly to reducing your balance and will shorten the length of your plan.
Tracking your payment plan and staying in compliance
Once your plan is in place, you can track your balance and payment history by logging into your IRS account at IRS.gov. The account shows your current balance, how much you have paid, when your next payment is due, and how much interest and penalties have accrued.
Make sure you pay on time each month. The IRS accepts payments online, by phone (1-800-829-1040), by mail, or through automatic bank withdrawal. Automatic withdrawal is the most reliable method because you do not have to remember to pay each month; the IRS withdraws the amount from your bank account on the date you choose.
If your address changes, update it with the IRS immediately so you do not miss notices about your plan. If you receive a notice saying your plan has been terminated, call the IRS right away to find out why and whether you can reinstate it.
Frequently Asked Questions
Can I set up a payment plan if I owe more than $50,000?
Yes, but you cannot use the online tool. You must call the IRS at 1-800-829-1040 or mail Form 9465. For debts over $50,000, the IRS may require a financial statement to verify you cannot pay the full amount, and they may require automatic bank withdrawal as a condition of the plan.
How long can I take to pay off my debt through a payment plan?
The length depends on your balance and the monthly payment you can afford. Most plans run 3 to 6 years, but the IRS will work with you to find a timeframe that fits your budget. Longer plans mean more interest, so paying faster saves money.
What if I already have a payment plan and want to change my monthly payment?
Log into your IRS account online and request a modification, or call 1-800-829-1040. You can lower your payment if your income has dropped, or raise it if you can afford to pay faster. Changes take effect within 30 days.
Do I still owe penalties and interest while I am on a payment plan?
Yes. Interest and failure-to-pay penalties continue to accrue on your unpaid balance until you pay in full. This is why paying faster saves money. The IRS does not stop charging interest or penalties just because you have a plan in place.
What happens to my payment plan if I file for bankruptcy?
Filing for bankruptcy may pause or modify your payment plan, depending on the chapter you file under. Contact a bankruptcy attorney and notify the IRS of your bankruptcy filing immediately. The IRS will be notified by the court, but telling them directly ensures your payment plan is handled correctly during the bankruptcy process.