The IRS lets you spread tax payments over time through a formal agreement called an installment agreement
If you owe federal income tax and cannot pay the full amount by the deadline, the IRS will let you pay in monthly installments instead of all at once. This is called an installment agreement. You set up the agreement yourself — the IRS does not offer it automatically, and you must request it before or shortly after the tax deadline to avoid larger penalties and interest charges.
The IRS has several types of installment agreements, ranging from short-term payment plans (120 days or fewer) to long-term plans that can stretch across years. Which one you use depends on how much you owe and how quickly you can pay. Setting one up takes 15 to 30 minutes if you do it online, or you can mail a form or call the IRS by phone.
Key Takeaways
- You can request an installment agreement online through IRS.gov, by mail using Form 9465, or by calling the IRS at 1-800-829-1040.
- Short-term agreements (120 days or fewer) have no setup fee; long-term agreements cost $31 to $225 depending on your method and income level.
- Interest and penalties continue to accrue on unpaid tax, so the longer you take to pay, the more you owe in total.
- The IRS can revoke your agreement if you miss a payment or fail to file future tax returns on time.
- If your circumstances change and you cannot make the monthly payment, you can request a modification or explore other options like an Offer in Compromise.
Three ways to request an installment agreement
The fastest method is online through IRS.gov. Go to irs.gov, search for "Online Payment Agreement," and follow the prompts. You will need your Social Security number, date of birth, and information from your tax return. The system will show you available monthly payment amounts and let you choose a due date that works for your budget. You get approval or denial immediately, and if approved, your agreement starts right away.
If you prefer to mail a form, use Form 9465 (Installment Agreement Request). Fill it out, sign it, and mail it to the IRS address listed in the form instructions — the address depends on which state you live in. Processing takes 30 to 60 days by mail. Include a check or money order for your first payment if you want to start paying immediately, though you can also wait for the IRS to contact you with payment instructions.
You can also call the IRS directly at 1-800-829-1040. Have your tax return information ready. A representative will walk you through the agreement setup over the phone and can answer questions about payment amounts and due dates. Phone lines are busiest in the morning and during tax season (January through April), so call in the afternoon or outside tax season if possible.
How much your monthly payment will be
The IRS calculates your monthly payment based on three things: the total amount you owe, the type of agreement you choose, and how quickly you want to pay it off. If you owe less than $50,000, you can usually set up a payment plan that lasts up to 72 months (six years). If you owe more, the timeline may be longer or you may need to pay a larger monthly amount.
When you request an agreement online or by phone, the IRS shows you the monthly payment amount before you commit. For example, if you owe $3,600 and choose a 36-month plan, your monthly payment would be roughly $100 (plus interest and penalties that accrue each month). You can adjust the timeline to lower the monthly payment, but this means paying more interest overall.
The IRS also charges a setup fee for long-term agreements. If you set up online, the fee is $31. If you mail Form 9465, the fee is $225. If you call, the fee is $225. Short-term agreements (120 days or fewer) have no setup fee. Some people with lower incomes may may have access to for a reduced fee of $31 regardless of method.
When interest and penalties stop adding up
Interest and failure-to-pay penalties continue to accrue on your unpaid tax balance every month until you pay it off completely. The interest rate is set by the IRS quarterly and is currently around 8 percent per year, though this changes. The failure-to-pay penalty is 0.5 percent of your unpaid tax per month, up to 25 percent total.
This means the longer your payment plan lasts, the more you pay in total. If you owe $5,000 and pay it off in 12 months, you will pay less in interest than if you pay it off over 60 months. However, a longer plan means a lower monthly payment, which may be what you can actually afford. The IRS online tool shows you the total amount you will pay (including interest and penalties) for each payment timeline you consider.
Once you make your final payment, the debt is settled and no more interest or penalties accrue. The IRS will send you a letter confirming the agreement is satisfied.
What happens if you miss a payment
If you miss a payment, the IRS will send you a notice. You typically have 30 days to make the missed payment before the IRS can terminate your agreement. If you do pay within that window, your agreement stays in place and you continue with your regular monthly payments.
If you do not pay within 30 days, the IRS will cancel your installment agreement and the full unpaid balance becomes due immediately. At that point, the IRS can pursue collection actions like wage garnishment or bank levy. You can request a new agreement, but the IRS is less likely to approve one if you have already defaulted on a previous plan.
If you know you cannot make a payment, contact the IRS before the due date. You can request a modification to your agreement, which means changing the monthly payment amount or extending the timeline. Call 1-800-829-1040 or log into your IRS account online to request a modification.
Your agreement can be revoked if circumstances change
The IRS can cancel your installment agreement if you fail to file a tax return or pay taxes on time in future years. For example, if you set up a payment plan in 2024 and then do not file your 2025 tax return by the deadline, the IRS may revoke your agreement. This is why it is critical to stay current on all future tax filings and payments, even while you are paying off the old debt.
If your financial situation improves and you can afford to pay more per month, you can request a modification to accelerate your payments. This reduces the total interest you pay. You can also pay off the entire balance early without penalty — there is no fee for paying ahead of schedule.
Other options if a payment plan does not work
If you cannot afford even a long-term installment agreement, the IRS has other tools. A Currently Not Collectible (CNC) status temporarily pauses collection while you face financial hardship. Interest and penalties still accrue, but the IRS stops pursuing wage garnishment or bank levies. You must reapply for CNC status periodically, usually every two years.
An Offer in Compromise lets you settle your tax debt for less than the full amount owed, but only if you meet strict financial criteria. The IRS accepts an Offer in Compromise only when it is unlikely you will ever be able to pay the full debt. This process takes several months and requires detailed financial documentation.
You can also explore temporary delay of collection if you are facing a short-term crisis (job loss, medical emergency) and expect your situation to improve within a few months. Contact the IRS to discuss which option fits your circumstances.
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, even if you cannot pay the full amount. Once the return is filed and processed, you can request an installment agreement. Filing late triggers additional penalties, so file as soon as possible even if you know you owe money.
What if I owe taxes from multiple years?
You can set up a single installment agreement that covers all years you owe, or separate agreements for each year. The IRS will usually combine them into one monthly payment for simplicity. When you request the agreement, specify which tax years the debt covers.
Do I have to pay the setup fee upfront?
The setup fee is usually added to your first payment or included in your monthly payment amount. You do not pay it separately. If you set up online and may have access to for a reduced fee based on income, the lower fee applies automatically.
Can I change my payment due date after the agreement starts?
Yes. You can request a modification to change the due date to match your pay schedule. Call 1-800-829-1040 or log into your IRS account online to make the change. There is no fee for a modification.
What if I receive a tax refund while I have an active payment plan?
The IRS will automatically apply your refund to your installment agreement balance, reducing what you owe. You cannot prevent this — it is automatic. This is actually helpful because it lowers your remaining debt and may shorten your payment timeline.