The IRS offers payment plans if you cannot pay your full tax bill at once
Yes. The IRS has two main payment plan options: a short-term extension and an installment agreement. A short-term extension gives you up to 180 days to pay in full without a formal plan. An installment agreement lets you pay over months or years, with a setup fee and interest added to what you owe. Which one works depends on how much you owe and when you can pay it back.
You can request a payment plan online, by phone, or by mail. The online route through IRS.gov is fastest if your bill is under $25,000. If you owe more, or if you have unpaid taxes from earlier years, you will need to call or send a form. The IRS does not require you to prove hardship — you just need to show you cannot pay the full amount right now.
Key Takeaways
- A short-term extension gives you up to 180 days to pay without setting up a formal installment agreement or paying a setup fee.
- An installment agreement spreads payments over months or years and costs between $31 and $225 to set up, depending on how you request it.
- You can request a payment plan online at IRS.gov if you owe $25,000 or less and have filed all required returns.
- Interest and penalties continue to accrue on unpaid taxes, even after you set up a payment plan.
- The IRS can modify or terminate your plan if you miss a payment or fail to file future returns on time.
Short-term extension versus installment agreement
A short-term extension is the simpler option if you need a few months to pay. You get up to 180 days from the date you request it. There is no setup fee, no interest calculation beyond what already accrues on your unpaid balance, and no monthly payment requirement. You simply pay the full amount by the deadline. This works if you are expecting a bonus, a refund from another source, or a lump sum within the next six months.
An installment agreement is what you need if you cannot pay the full bill within 180 days. You agree to pay a set amount each month until the debt is cleared. The IRS charges a setup fee ($31 to $225 depending on the method you use) and continues to charge interest on the unpaid balance. Monthly payments are typically $25 or more, though the IRS will work with you if that is not feasible. The agreement can last anywhere from a few months to six years, depending on how much you owe and what you can afford.
Interest and failure-to-pay penalties continue to accrue on both types of plans. The failure-to-pay penalty is 0.5% of your unpaid tax per month. Interest compounds daily. So the longer your plan runs, the more you will owe in total. Paying off the debt faster saves money, but the IRS will not reject a plan because the payments are small.
How to request a payment plan online
If you owe $25,000 or less and have filed all required tax returns for the past six years, you can set up an installment agreement online at IRS.gov without calling or mailing a form. Go to the IRS Online Payment Agreement tool, log in with your ID.me account (or create one), and follow the prompts. You will enter your Social Security number, the tax year(s) you owe for, and how much you can pay each month.
The tool will show you the setup fee and the total interest you will pay over the life of the plan based on your proposed monthly payment. You can adjust the payment amount to see how it changes the timeline and total cost. Once you confirm, the agreement is active immediately. The IRS will send you a notice by mail within two weeks confirming the terms.
You will make your first payment by the date shown on your notice. Set up automatic payments from your bank account to avoid missing a deadline — missing even one payment can terminate the agreement and trigger collection action. You can change your monthly payment amount online at any time, or request a temporary pause if you face a hardship.
Requesting a payment plan by phone or mail
Call the IRS at 1-800-829-1040 if you owe more than $25,000, have unfiled returns, or prefer to speak with someone. Have your Social Security number, the tax year(s) you owe for, and a realistic monthly payment amount ready. The IRS representative will review your situation and set up an installment agreement over the phone. You will receive a notice in the mail within 30 days confirming the terms and your first payment due date.
You can also request a payment plan by mail using Form 9465, Installment Agreement Request. Print the form, fill it out, and mail it to the IRS address shown in your tax notice. Include a check or money order for the setup fee if you want to pay it upfront (this reduces the fee from $225 to $31 if you request online or by phone). Mail the form to the address on your notice. Processing takes 30 to 60 days by mail, so call if you need a faster response.
What happens if you miss a payment
Missing a single payment does not automatically end your agreement, but the IRS will send you a notice asking you to catch up. You have 30 days to make the missed payment and any current payment due. If you do not, the IRS can terminate the agreement and pursue collection action, including wage garnishment or bank levy.
If you know you will miss a payment, contact the IRS before the due date. You can request a temporary pause (called a hardship deferment) or ask to lower your monthly payment. The IRS is more willing to work with you if you reach out first rather than missing the deadline and waiting for a notice.
How payment plans affect your credit and other debts
Setting up a payment plan with the IRS does not directly damage your credit score — the IRS does not report to credit bureaus. However, if the IRS files a Notice of Federal Tax Lien before you set up the plan, that lien will appear on your credit report and will hurt your score. A lien is a legal claim on your assets and is filed when you owe $15,000 or more and have not responded to IRS notices.
If you set up a payment plan before a lien is filed, the IRS is less likely to file one. If a lien is already in place, you can request that the IRS withdraw it once you have made payments on time for three months. Withdrawing the lien removes it from your credit report within 30 days.
A payment plan does not stop the IRS from offsetting your future tax refunds. If you are owed a refund in a later year, the IRS will apply it to your remaining balance instead of sending it to you. This continues until your debt is paid off.
When a payment plan might not work
The IRS will not set up a payment plan if you have not filed all required tax returns for the past six years. You must file those returns first, even if you cannot pay the tax owed on them. Once you have filed, you can then request a plan that covers all years at once.
If you are self-employed or own a business, the IRS may require a more detailed financial statement before approving a plan. You may need to submit Form 433-B, Collection Information Statement for Businesses, showing your income, expenses, and assets. This helps the IRS determine whether your proposed payment is realistic.
If you have a history of not filing returns or not paying taxes on time, the IRS may require a larger monthly payment or a shorter payment period. Repeat violations can result in the IRS refusing a payment plan altogether and pursuing collection action instead.
Frequently Asked Questions
Can I set up a payment plan if I owe taxes from multiple years?
Yes. You can combine all years into a single installment agreement. The IRS will calculate the total amount owed across all years and set up one monthly payment. You must have filed returns for all years, even if you could not pay them.
What if I cannot afford the minimum monthly payment?
Contact the IRS and explain your situation. You can request a payment as low as $25 per month, or ask for a temporary pause if you are facing a hardship. The IRS may also consider a partial payment plan if your income is very low.
Do I still owe interest and penalties while on a payment plan?
Yes. Interest accrues daily on your unpaid balance at the federal rate plus 3%. The failure-to-pay penalty (0.5% per month) also continues. These amounts are added to your balance, so your total debt may grow even as you make payments.
Can I pay off my plan early without a penalty?
Yes. You can pay off your installment agreement at any time without penalty. Paying early saves you money on interest. Contact the IRS to confirm your payoff amount before sending a lump sum payment.
What if my financial situation changes and I cannot keep paying?
Contact the IRS immediately. You can request a modification to lower your payment, request a temporary pause, or ask about other options like an offer in compromise (settling for less than you owe). The IRS is more likely to work with you if you reach out before missing a payment.