Yes, you can set up a payment plan with the IRS if you owe taxes and cannot pay in full

The IRS offers two main types of payment plans: short-term (120 days or fewer) and long-term installment agreements (longer than 120 days). A short-term plan lets you delay payment without a formal agreement—you simply pay within 120 days. A long-term installment agreement is a formal contract where you make monthly payments over time, typically ranging from a few months to six years depending on what you owe.

You do not need to wait for the IRS to contact you. You can request a plan yourself through the IRS website, by phone, or by mail. The IRS will charge you a setup fee (usually $31 to $225 depending on the method you use and your income level) and may charge interest and penalties on top of your original tax debt while the plan is active.

Key Takeaways

  • Short-term plans last 120 days or fewer and require no formal agreement; long-term installment agreements can stretch over several years with monthly payments.
  • You can request a plan online through IRS.gov, by calling 1-800-829-1040, or by mailing Form 9465 to the IRS address on your tax notice.
  • The IRS charges a setup fee ($31 to $225) plus interest and penalties that continue to accrue while you make payments.
  • If you earn less than about $73,000 per year (as of 2024), you may may have access to for a reduced setup fee.
  • Missing a payment on your plan can result in the agreement being cancelled and the full balance becoming due immediately.

Three ways to request a payment plan

Online through IRS.gov is the fastest route if you have a Social Security number, an Individual Taxpayer Identification Number (ITIN), or an Employer Identification Number (EIN), plus access to your tax return information. Go to IRS.gov, search for "payment plan," and follow the prompts. You will receive confirmation immediately and can see your plan details right away. The setup fee is $31 if you pay by electronic funds withdrawal (automatic bank deduction) or $225 if you pay by check or credit card.

By phone, call the IRS at 1-800-829-1040 (Monday through Friday, 7 a.m. to 7 p.m. your local time). A representative will walk you through the process and can answer questions about your specific situation. Phone setup fees are the same as online: $31 for electronic withdrawal or $225 for other payment methods.

By mail, complete Form 9465 (Installment Agreement Request) and send it with your tax notice to the IRS address printed on that notice. Include a check or money order for the setup fee if you want to pay it upfront, or the IRS will add it to your first payment. Mail processing takes longer—typically two to four weeks—so use this method only if you cannot access the online system or phone line.

What the IRS will ask you and what you need to provide

The IRS will ask how much you can pay each month. Be honest about this number—if you overcommit and miss payments, your plan will be cancelled. You will need your Social Security number or ITIN, your tax return information (the year and type of return), and the amount you owe. If you are setting up a plan by mail, you will also need to include your name, address, and daytime phone number on Form 9465.

If you are requesting a plan for a business (using an EIN), you will need to provide the business's tax information and the amount owed. The process is the same, but the fee structure may differ slightly depending on your business size and income.

How much your monthly payment will be and what fees you will pay

Your monthly payment depends on how much you owe and how long you want the plan to last. The IRS will calculate a suggested payment amount based on your debt, but you can propose a different amount when you request the plan—as long as it is enough to pay off the debt within a reasonable timeframe (usually no more than six years for most taxpayers). If you cannot afford even a small monthly payment, you may be able to request a temporary delay or a very small payment while you work on your finances.

On top of your monthly payment, you will owe interest (currently around 8% per year, though this changes quarterly) and penalties (typically 0.5% of your unpaid tax per month). These accrue whether you are on a payment plan or not, but a plan stops the IRS from taking collection action like wage garnishment or bank levy while you are making payments on time.

Setup fees range from $31 to $225 depending on how you request the plan and how you pay. Low-income taxpayers (those earning less than about $73,000 per year as of 2024) may may have access to for a reduced setup fee of $31 regardless of payment method. The IRS will add the setup fee to your first payment or let you pay it separately.

What happens if you miss a payment or need to change your plan

If you miss a payment, the IRS will typically send you a notice. You usually have 30 days to bring the account current before the agreement is cancelled. If the plan is cancelled, the full remaining balance becomes due immediately, and the IRS can resume collection actions like garnishing your wages or seizing your bank account.

If your financial situation changes and you cannot afford your current payment amount, contact the IRS before you miss a payment. You can request a modification to lower your monthly payment or extend the plan timeline. Call 1-800-829-1040 or log into your IRS account online to make changes. Modifying a plan may involve another setup fee, though the IRS sometimes waives this if you are already in a plan.

When a payment plan makes sense and when other options might be better

A payment plan is the right choice if you owe a moderate amount (typically under $50,000) and can afford to make monthly payments, even if they are small. It stops collection action immediately and lets you resolve your debt over time without a lump-sum payment.

If you owe a very large amount and cannot afford meaningful monthly payments, you might explore an Offer in Compromise (settling for less than you owe) or Currently Not Collectible status (a temporary pause on collection while you face financial hardship). These are more complex and take longer to set up, but they may be worth exploring if a payment plan would take many years to complete. You can discuss these options with the IRS by phone or with a tax professional.

How to track your payment plan and make sure payments are being applied correctly

Once your plan is approved, the IRS will send you a confirmation letter with your plan details, including your monthly payment amount, due date, and the total amount you owe. Keep this letter for your records.

You can check your account balance and payment history anytime by logging into your IRS account at IRS.gov (search for "IRS account"). This shows your current balance, payments received, interest and penalties accrued, and the status of your plan. If you set up automatic bank withdrawal, the IRS will deduct your payment on the due date each month.

If you pay by check or money order, make sure to include your tax identification number and the tax year on the payment. Mail payments to the address shown on your IRS notice. Allow at least two weeks for the IRS to receive and post your payment, so send it early enough to avoid being marked late.

Frequently Asked Questions

Can I get a payment plan if I have already received a notice of intent to levy?

Yes. Requesting a payment plan stops the levy process, but you must request it before the levy is actually carried out. If you have received a notice of intent to levy, contact the IRS immediately by phone (1-800-829-1040) or online to request a plan. A payment plan will halt collection action while you make payments on time.

What if I cannot afford any monthly payment right now?

You can request a temporary delay or a very small payment (sometimes as low as $25 per month) while you work on your finances. You can also ask about Currently Not Collectible status, which pauses collection action for a set period. Contact the IRS by phone to discuss your situation and explore these options.

Do I have to pay the setup fee upfront, or can I add it to my payments?

You can do either. If you pay online or by phone, you can pay the setup fee immediately or have the IRS add it to your first payment. If you mail Form 9465, you can include a check for the fee or let the IRS add it to your plan. Either way, it does not delay your plan approval.

Will a payment plan hurt my credit score?

A payment plan itself does not appear on your credit report. However, the original tax debt may have already been reported to credit bureaus before you set up the plan. Once you are making payments on time, the account status may improve over time, but this depends on the credit bureau and how the debt was originally reported.

Can I pay off my plan early without a penalty?

Yes. You can pay off your plan early at any time without penalty. If you receive a tax refund while you are on a payment plan, the IRS will automatically apply it to your remaining balance, which speeds up payoff. You can also make extra payments whenever you have the money available.