Yes, you can make a partial payment to the IRS, but the unpaid balance will accrue interest and penalties until you settle it in full

The IRS does not require you to pay your entire tax bill at once. You can send in whatever amount you can afford right now, and the agency will credit it toward what you owe. However, the portion you do not pay immediately will continue to grow. Interest accrues daily at a rate set quarterly by the IRS (currently around 8 percent annually, though this changes). You will also owe a failure-to-pay penalty of 0.5 percent per month on the unpaid balance, which compounds monthly until you settle the debt or enter a formal payment arrangement.

The IRS treats a partial payment the same way it treats any other payment: it reduces your balance, but it does not stop the clock on interest and penalties. If you send $500 toward a $5,000 bill, you now owe $4,500 plus whatever interest and penalties accrue on that $4,500 going forward. This is why partial payments alone are not a long-term solution—they buy you time, but they do not solve the underlying problem.

Key Takeaways

  • Partial payments reduce your balance but do not stop interest (currently around 8 percent annually) or the 0.5 percent monthly failure-to-pay penalty from accruing on what remains unpaid.
  • If you cannot pay in full, a formal payment plan (installment agreement) stops the failure-to-pay penalty from growing and gives you a fixed monthly amount to work with.
  • You can set up a payment plan online through IRS.gov, by phone at 1-800-829-1040, or by mailing Form 9465 with your tax return or notice.
  • Short-term extensions (120 days) delay payment without a formal plan, but interest and penalties continue to accrue during that time.
  • If you cannot pay even a partial amount now, contact the IRS about currently not collectible status, which temporarily pauses collection activity while interest and penalties still accrue.

How interest and penalties work on unpaid tax debt

The IRS charges two separate costs on money you owe: interest and penalties. Interest is calculated daily on your unpaid balance. The rate changes every quarter and is published by the IRS; as of early 2024, it sits around 8 percent per year, but check IRS.gov for the current rate if your bill is from a different quarter. This interest compounds, meaning you pay interest on the interest.

The failure-to-pay penalty is 0.5 percent of your unpaid tax per month (or part of a month). This penalty stops accruing only when you enter a formal installment agreement with the IRS or when you pay the bill in full. A partial payment alone does not stop this penalty—it only reduces the balance the penalty applies to. If you owe $5,000 and send $500, the 0.5 percent penalty now applies to $4,500 instead of $5,000, but it keeps growing month after month until you have a plan in place.

There is also a failure-to-file penalty if you did not file your return on time, but that is separate from the failure-to-pay penalty and is not affected by making partial payments.

Setting up an installment agreement to stop the penalty from growing

If you cannot pay your full bill, the fastest way to stop the failure-to-pay penalty from growing is to set up an installment agreement with the IRS. This is a formal payment plan where you agree to pay a fixed amount each month until your debt is settled. Once you have an agreement in place, the failure-to-pay penalty stops accruing—interest still does, but the penalty freezes at whatever it was when you entered the plan.

You can set up a payment plan online at IRS.gov without calling or mailing anything. Go to the IRS website, find the payment plan section, and follow the prompts. You will need your Social Security number, date of birth, and the amount you owe. The IRS will calculate a monthly payment based on how long you want to take to pay off the debt. You can also call 1-800-829-1040 to set up a plan by phone, or mail Form 9465 (Installment Agreement Request) with your tax return or with the notice the IRS sent you.

There is a setup fee for an installment agreement, which varies depending on how you set it up. Online setup is cheaper (around $31 to $225 depending on the payment method) than phone or mail setup (around $31 to $225 as well, but phone and mail may have higher fees). Once your plan is approved, you make monthly payments by the due date shown in your agreement. Missing a payment can cause the agreement to be cancelled, so set up automatic payments if you can.

The difference between a payment plan and a short-term extension

The IRS offers two ways to delay full payment: a short-term extension and an installment agreement. They work differently, and which one you need depends on your situation.

A short-term extension gives you up to 120 days to pay without setting up a formal plan. You do not have to make monthly payments—you just have one larger payment due at the end of the 120 days. You can request a short-term extension by calling 1-800-829-1040 or through IRS.gov. During the extension period, interest and penalties continue to accrue, so this option is best if you expect to have the money soon and do not want to commit to a monthly payment schedule.

An installment agreement is a formal plan where you pay a set amount each month over a longer period (typically 3 to 72 months, depending on how much you owe). The failure-to-pay penalty stops growing once the plan is in place, which saves you money over time. This is the better choice if you cannot pay the full amount within 120 days.

What happens if you make partial payments without a formal plan

If you send in partial payments without setting up an installment agreement, the IRS will credit each payment to your account and reduce your balance. However, interest and the failure-to-pay penalty will keep growing on the unpaid portion. You will receive notices from the IRS showing your remaining balance and the penalties and interest that have accrued.

The IRS may also take collection action if you do not respond to notices or set up a payment plan. This can include wage garnishment (the IRS orders your employer to withhold a portion of your paycheck), a bank levy (the IRS freezes and takes money from your bank account), or a tax lien (the IRS files a claim against your property). These actions are more likely if you ignore IRS notices and do not make any effort to resolve the debt.

Making partial payments shows the IRS you are trying to pay, which is better than ignoring the debt entirely. But without a formal plan, you are not stopping the penalties from growing, and you may still face collection action if the IRS decides to pursue it.

Currently not collectible status if you cannot pay anything right now

If you cannot afford to make even a partial payment right now, you can ask the IRS to place your account in currently not collectible (CNC) status. This temporarily pauses IRS collection activity—they will not pursue wage garnishment, bank levies, or liens while you are in CNC status. However, interest and penalties continue to accrue on your debt, and the IRS can remove you from CNC status at any time if your financial situation improves.

CNC status is not permanent forgiveness. It is a temporary pause. The IRS will periodically review your account to see if your situation has changed. If it has, they can resume collection efforts. You can request CNC status by calling 1-800-829-1040 and speaking with a representative, or by submitting Form 433-F (Collection Information Statement) if the IRS has already contacted you about collection.

CNC status is useful if you are facing financial hardship right now but expect your situation to improve later. It gives you breathing room without the threat of immediate collection action, though your debt continues to grow.

How to make a partial payment to the IRS

You can send a partial payment to the IRS through several methods. The most common are:

  • Online payment: Go to IRS.gov and use the payment tool. You can pay by debit card, credit card, or electronic bank transfer. There may be a processing fee depending on the payment method.
  • Phone payment: Call 1-800-829-1040 and speak with a representative who can process a payment over the phone using your bank account or card.
  • Mail: Send a check or money order to the IRS address shown on your notice. Include your name, address, Social Security number, and the tax year the payment is for. Mail payments take longer to process (typically 2 to 3 weeks).
  • Automatic withdrawal: Set up recurring payments from your bank account through IRS.gov or Form 9465.

When you make a payment, include a note or reference your tax year and the type of tax (income tax, self-employment tax, etc.) so the IRS credits it to the correct account. If you are paying on a notice the IRS sent you, include the notice number as well.

Frequently Asked Questions

Will making a partial payment stop the IRS from taking collection action?

Partial payments alone do not stop collection action. However, they show the IRS you are trying to pay, which may delay enforcement. The best way to stop collection action is to set up an installment agreement, which signals to the IRS that you have a plan to resolve the debt.

Can I make partial payments and then set up a payment plan later?

Yes. The IRS will credit any partial payments you make toward your total balance. When you set up an installment agreement, the monthly payment is calculated based on what you still owe after those partial payments are applied. However, waiting to set up a plan means the failure-to-pay penalty continues to grow during that time.

What if I cannot afford the monthly payment the IRS calculates for me?

Call 1-800-829-1040 and explain your situation. The IRS can adjust the payment amount or extend the payment period, though this means paying more interest over time. If you truly cannot afford any monthly payment, ask about currently not collectible status instead.

Do partial payments reduce the interest I owe?

Partial payments reduce the balance that interest accrues on going forward, but they do not reduce the interest that has already accrued. If you owe $5,000 in tax plus $500 in interest, and you send $500, the interest that was already owed stays on your account, and interest continues to accrue on the remaining $5,000 in tax.

How long does the IRS give me to pay if I do not set up a plan?

The IRS typically gives you 10 days from the date of a notice to pay in full. After that, you can request a short-term extension (up to 120 days) or set up an installment agreement. If you do not respond to notices, the IRS may pursue collection action without further warning.