The three ways to set up an IRS payment plan
You can set up a payment plan with the IRS through three routes: online through their website, by phone, or by mail. The online route is fastest — you can have a plan in place within minutes if you know your tax ID, filing status, and the amount you owe. The IRS calls these installment agreements, and they let you pay what you owe in monthly chunks instead of a lump sum.
The method you choose depends on how much you owe and how quickly you need the plan active. If you owe less than $50,000 in combined taxes, penalties, and interest, you can set up a plan online without talking to anyone. If you owe more, or if you want a plan that lasts longer than six years, you will need to call or mail in a form.
All three routes lead to the same outcome: a monthly payment amount, a due date each month, and a formal agreement with the IRS. The IRS charges a setup fee (usually between $31 and $225 depending on the method) and interest on the unpaid balance, but once the plan is in place, the IRS will not pursue collection action as long as you make your payments on time.
Key Takeaways
- You can set up a payment plan online in minutes at IRS.gov if you owe less than $50,000 and have a valid tax ID and current filing status.
- The IRS charges a setup fee between $31 and $225 and continues to charge interest on your unpaid balance until the plan is complete.
- Monthly payments typically range from $25 to several hundred dollars depending on what you owe and how long you want the plan to last.
- If you miss a payment or fall behind, the IRS can cancel the plan and resume collection action, so setting up automatic payments reduces that risk.
- You can modify or pay off your plan early without penalty, and the IRS will send you a payment coupon or allow you to pay online each month.
Setting up a plan online through IRS.gov
Go to IRS.gov and search for "Online Payment Agreement" or navigate directly to the payment agreement tool. You will need your Social Security number or Individual Taxpayer Identification Number, your filing status from your most recent tax return, and the total amount you owe. The tool will ask you to confirm your identity by answering security questions based on your credit file or recent tax returns.
Once you are logged in, the tool shows you the amount owed and offers you a choice of payment terms. You can choose how many months you want to pay over — typically 24, 36, 48, or 60 months — and the tool calculates your monthly payment automatically. The shorter the term, the lower your total interest cost, but the higher your monthly payment. The tool also shows you the setup fee upfront.
After you choose your term and review the agreement, you can authorize the IRS to debit your bank account on a date you select each month. This is the fastest and cheapest route: the setup fee is $31 if you set up automatic bank withdrawals, compared to $225 if you pay by check or money order. Once you submit, you receive a confirmation number immediately, and your plan is active.
Calling the IRS to set up a 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, filing status, and the tax year(s) you owe for ready before you call. The wait time varies — during tax season (January through April) it can be 30 minutes or longer, but outside that window it is usually shorter.
When you reach a representative, tell them you want to set up an installment agreement. They will verify your identity, confirm the amount you owe, and walk you through payment term options. They can set up automatic bank withdrawals or arrange for you to pay by check or money order each month. If you choose automatic withdrawals, the setup fee is $31; otherwise it is $225.
The representative will give you a confirmation number and a payment due date before you hang up. You will receive a written agreement in the mail within two weeks. If you set up automatic payments, the first withdrawal happens on the date you agreed to, so make sure your bank account has enough funds.
Mailing in Form 9465 if you prefer not to call or go online
Download Form 9465 (Installment Agreement Request) from IRS.gov or request it by phone. Fill in your name, address, Social Security number, the tax year(s) you owe for, and the total amount owed. On the form, you propose a monthly payment amount — the IRS will accept it if it covers the full amount owed within 72 months, but they may counter with a different amount if your proposal is too low.
Mail the completed form to the IRS address listed in the instructions (it varies by state). Include a check or money order for the setup fee ($225 if you are not setting up automatic withdrawals, $31 if you are). If you want automatic bank withdrawals, include a voided check or bank account information on the form.
Processing by mail takes four to six weeks. You will receive a written agreement confirming your payment plan, the monthly amount, and the due date. Do not make payments until you receive this agreement — if you send money before the plan is approved, the IRS may apply it to penalties or interest rather than to your installment plan.
What happens after your plan is approved
Once your plan is active, you owe a monthly payment on a set date each month. The IRS continues to charge interest and penalties on the unpaid balance, so your total cost grows slightly each month even as you pay down the principal. The interest rate is set by law and changes quarterly; the current rate is published on IRS.gov.
If you set up automatic bank withdrawals, the IRS pulls the payment from your account on the date you chose. If you are paying by check or money order, you will receive a payment coupon in the mail with the amount due and where to send it. You can also pay online through IRS.gov using a debit or credit card, though the IRS charges a processing fee (usually $2 to $4) if you do.
Keep making payments on time. If you miss a payment or are more than 30 days late, the IRS can cancel your plan and resume collection action — that means they can garnish your wages, levy your bank account, or place a lien on your property. If you know you will miss a payment, call the IRS immediately to ask about a temporary delay or a modified plan.
Modifying or paying off your plan early
If your financial situation changes and you can no longer afford your monthly payment, you can request a modification. Call the IRS at 1-800-829-1040 or log into your account on IRS.gov to request a lower payment or a longer payment term. The IRS will review your request and may approve a new plan with a different monthly amount.
If you come into money and want to pay off the plan early, you can do so without penalty. Send a check or money order for the remaining balance to the IRS address on your payment coupon, or pay online through IRS.gov. Once the balance reaches zero, your plan is complete and the IRS sends you a confirmation letter.
You can also make extra payments toward your plan at any time. If you make a lump-sum payment in addition to your regular monthly payment, it reduces the principal faster and lowers your total interest cost. There is no fee for paying early or paying extra.
Setup fees, interest, and the total cost of a payment plan
The IRS charges a setup fee when you create the plan: $31 if you set up automatic bank withdrawals, $225 if you pay by check or money order. This fee is added to your balance and included in your monthly payments, so you pay it off gradually rather than upfront.
Interest accrues on your unpaid balance every day until the plan is complete. The interest rate changes quarterly and is based on the federal short-term rate plus 3 percent. As of early 2024, the rate is around 8 percent annually, but this varies. You can find the current rate on IRS.gov under "Interest Rates".
The longer your payment plan, the more interest you pay overall. For example, a $5,000 debt paid over 24 months costs less in interest than the same debt paid over 60 months. However, a longer plan means a lower monthly payment, which may be necessary if your budget is tight. Use the IRS payment calculator on their website to see the total cost under different payment terms before you commit.
Frequently Asked Questions
What if I owe more than $50,000?
You cannot set up a plan online if you owe more than $50,000. Call the IRS at 1-800-829-1040 or mail Form 9465 instead. For large amounts, the IRS may require you to provide financial information to prove you cannot pay in full, and they may propose a payment term longer than six years.
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 bill yet. Filing early and setting up a plan quickly reduces penalties and interest.
What happens if I miss a payment?
If you miss a payment, the IRS will send you a notice. If you are more than 30 days late, the IRS can cancel your plan and resume collection action, including wage garnishment or bank levies. Contact the IRS immediately if you know you will miss a payment to discuss options.
Can I change my payment amount or payment date after the plan is set up?
Yes. Log into your IRS account online or call 1-800-829-1040 to request a modification. You can lower your payment, extend your payment term, or change the date your payment is due each month. The IRS will review your request and send you a new agreement if approved.
Do I still owe penalties and interest while I am on a payment plan?
Yes. Interest continues to accrue on your unpaid balance every day until the plan is complete. Penalties may also continue depending on the type of penalty. The monthly payment you make covers both principal and interest, so your balance decreases with each payment even though interest is still being charged.