The three ways to set up a payment plan with the IRS

You can set up an IRS payment plan in three ways: online through the IRS website (fastest, takes minutes), by phone with an IRS representative (takes 15 to 30 minutes), or by mail using Form 9465. The online route works if you owe $50,000 or less in combined taxes, penalties, and interest. If you owe more than $50,000, you must call or mail the form.

The IRS charges a setup fee for payment plans. The fee ranges from $31 to $225 depending on which method you use and whether you set up automatic payments from your bank account. Automatic payments cost less — usually $31 instead of $225 — because the IRS has lower collection costs when money comes directly from your account.

Before you set up a plan, you need a few pieces of information: your Social Security number or Individual Taxpayer Identification Number (ITIN), the tax year you owe for, and how much you owe. If you do not know the exact amount, you can find it on your most recent IRS notice or by logging into your IRS account online.

Key Takeaways

  • Online setup through IRS.gov takes about 10 minutes and works for debts of $50,000 or less; phone setup takes 15 to 30 minutes and works for any amount.
  • Automatic bank payments cost $31 to set up; manual payments cost $225, so linking your bank account saves money over time.
  • Monthly payments on a short-term plan (120 days or less) are usually higher than on a long-term plan, which can stretch payments over six years.
  • The IRS charges interest and penalties on top of your tax debt while you are on a payment plan, so the total amount you pay will be more than what you currently owe.
  • If your financial situation changes, you can modify or cancel your plan by contacting the IRS, though cancellation may trigger collection action.

Setting up a payment plan online

Go to IRS.gov and search for "Online Payment Agreement." You will land on a page that lets you start the process immediately. You will need to enter your Social Security number or ITIN, your date of birth, and your filing status. The IRS will pull up your account and show you what you owe.

Next, you choose how much you want to pay each month. The IRS will suggest a monthly amount based on your total debt and how long you want the plan to last. You can accept the suggestion or change it. If you choose a lower monthly payment, your plan will last longer and you will pay more interest overall. If you choose a higher payment, the plan ends sooner.

Then you decide whether to pay by automatic bank transfer or by check or money order each month. If you choose automatic transfer, provide your bank account and routing number. The IRS will make one small test deposit to your account (usually under $1) to confirm the account is real, then begin regular payments on the date you choose. Automatic payments must start within 30 days.

At the end, you will see the setup fee and your first payment date. You can print a confirmation or have it emailed to you. The plan takes effect immediately, and the IRS stops collection action once you have made your first payment on time.

Setting up 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, date of birth, and the tax year you owe for ready. Tell the representative you want to set up a payment plan.

The representative will pull up your account, confirm what you owe, and ask how much you can pay each month. They will also ask whether you want automatic payments from your bank account. If you do, provide your account and routing number over the phone. The representative will explain the setup fee and your payment schedule, then confirm everything before ending the call.

You will receive a written agreement in the mail within two weeks. Keep this document — it shows the terms of your plan and your payment due date each month. If you do not receive it within three weeks, call the IRS again to request a copy.

Setting up a payment plan by mail

Download Form 9465 (Installment Agreement Request) from IRS.gov. Fill in your name, address, Social Security number, and the tax year you owe for. On the form, write how much you want to pay each month and what date each month you want to make the payment.

Attach the form to the front of your IRS notice (the letter that tells you what you owe). Mail both to the address shown on your notice. Do not send cash — include a check or money order for your first payment if you want to include it, though you can also wait until the IRS confirms your plan.

The IRS will process your form within 30 days and send you a written agreement. Your plan does not take effect until you receive this agreement in writing. If you do not hear back within 45 days, call the IRS to check the status.

Short-term versus long-term payment plans

A short-term plan lasts 120 days or less. Monthly payments are higher because you are paying off the debt faster. The setup fee is lower (usually $31 with automatic payments), and you pay less interest overall because the debt is gone sooner. Use a short-term plan if you can afford larger monthly payments and want to be done quickly.

A long-term plan lasts more than 120 days and can stretch up to six years. Monthly payments are smaller, making the plan easier to fit into your budget. The setup fee is higher (usually $225 without automatic payments, $31 with), and you pay more interest because the debt sits longer. Use a long-term plan if you need lower monthly payments to stay current.

The IRS will suggest a plan length based on what you owe. If you owe $10,000, they might suggest 60 months (five years). If you owe $2,000, they might suggest 24 months (two years). You can always ask for a longer or shorter plan when you set up the agreement.

What happens after you set up your plan

Once your plan is in place, you must make every payment on time. If you miss a payment, the IRS may cancel your plan and resume collection action. If you are on automatic payments and your bank declines a payment, contact the IRS immediately to reschedule it.

Interest and penalties continue to accrue on your debt while you are on a payment plan. This means the total amount you pay will be higher than what you owed when you started. The IRS publishes the current interest rate (usually around 8 percent per year, but it changes quarterly) on its website.

If your financial situation improves and you can pay faster, you can pay extra toward your tax debt at any time without penalty. If your situation worsens and you cannot afford your monthly payment, contact the IRS to modify your plan. You can request a lower payment, a longer plan, or a temporary pause (called a hardship deferment).

Modifying or canceling your payment plan

To change your monthly payment amount or payment date, log into your IRS account online, call 1-800-829-1040, or send a written request to the address on your payment agreement. Changes usually take effect within 30 days.

If you want to cancel your plan, you can do so at any time, but understand that cancellation means the IRS may resume collection action — wage garnishment, bank levy, or tax refund offset. Only cancel if you can pay the full remaining balance immediately or if your circumstances have changed so dramatically that you need to renegotiate.

If you fall behind on your plan payments, the IRS will send you a notice. You have the right to request a hearing before the IRS cancels your agreement. Contact the IRS within 30 days of receiving the notice if you want to dispute the cancellation or request a modification instead.

Frequently Asked Questions

Can I set up a payment plan if I have not filed my tax return yet?

No. You must file your return first so the IRS knows what you owe. Once you file, you can set up a plan immediately, even if you have not received a notice yet. If you are behind on filing, file as soon as you can to stop penalties from growing.

What if I cannot afford the minimum monthly payment the IRS suggests?

Request a lower payment when you set up your plan, or call the IRS afterward to modify it. There is no official minimum, but the IRS wants to see that you are making a good-faith effort to pay. If you truly cannot pay anything, ask about a hardship deferment, which temporarily pauses your payments while you deal with financial crisis.

Will setting up a payment plan hurt my credit score?

The IRS does not report payment plans to credit bureaus, so the plan itself does not appear on your credit report. However, if the IRS filed a tax lien before you set up the plan, that lien may already be on your report. Once you pay off the debt, you can request that the lien be released.

Can I set up a payment plan for taxes I owe from multiple years?

Yes. You can combine taxes from different years into one payment plan. When you set up the plan, the IRS will list all the years you owe for and the total amount. Your monthly payment covers all of them together.

What if I get a tax refund while I am on a payment plan?

The IRS will automatically apply your refund to your remaining tax debt, reducing what you owe. This is called a tax refund offset. Your monthly payment amount does not change unless you request a modification, so paying off the debt faster means your plan ends sooner.