The three ways to set up an IRS payment plan
You can set up an IRS payment plan in three ways: online through the IRS website (fastest, takes minutes), by phone with an IRS representative, or by mail. The online route works if you owe $50,000 or less in combined taxes, penalties, and interest. If you owe more, you must call or mail a form.
The IRS calls these arrangements installment agreements. Once approved, you make monthly payments instead of paying the full amount at once. The IRS charges a setup fee (usually $31 to $225 depending on your method) and interest on the unpaid balance until you finish paying.
Your payment plan begins as soon as the IRS accepts it. You do not have to wait for a letter in the mail to start making payments, though a confirmation notice will arrive within two weeks.
Key Takeaways
- You can set up a plan online at IRS.gov if you owe $50,000 or less; larger debts require a phone call or mailed form.
- The IRS charges a setup fee ($31 to $225) and continues charging interest on your unpaid balance each month.
- Monthly payments can be as low as $25, but the longer your plan runs, the more interest you pay overall.
- You must stay current on all future tax returns and payments while on a plan, or the agreement can be cancelled.
- If your financial situation changes, you can request a different payment amount or switch to a different plan type.
Setting up a plan online (fastest option)
Go to IRS.gov and search for "Online Payment Agreement." You will land on a page where you can enter your Social Security number, filing status, and tax year. The system will pull up what you owe and let you choose your monthly payment amount.
You need a valid email address and a way to pay your first installment (debit card, credit card, or bank account). The IRS will charge your setup fee and first payment immediately. The whole process takes about 10 minutes.
This route only works if your total debt is $50,000 or less. If you owe more, the system will tell you to call 1-800-829-1040 instead.
Setting 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 in question ready. The representative will tell you what you owe and discuss payment options with you.
You can choose your monthly payment amount, but the IRS has a minimum: usually $25 per month, though some situations require higher amounts. The representative will also explain the setup fee and total interest you will pay over the life of the plan.
Once you agree, the IRS will set up the plan on the call. You can arrange to pay by automatic withdrawal from your bank account (which costs less in setup fees) or by check, money order, or card payment.
Mailing a form if you prefer not to call
Download Form 9465 (Installment Agreement Request) from IRS.gov. Fill it out with your name, Social Security number, the tax year, and how much you want to pay each month. Attach a copy of your most recent tax return and mail it to the address listed on the form (varies by state).
The IRS will process your form in about 30 days and send you a letter confirming whether your plan was accepted. Do not wait for this letter to start paying; you can begin making payments as soon as you mail the form, and the IRS will credit them to your account.
This method takes longer than calling or going online, so use it only if you cannot access a phone or computer.
How much you pay each month and how long it takes
Your monthly payment depends on how much you owe and how long you want the plan to run. The IRS will suggest a payment amount based on your debt, but you can negotiate. Monthly payments can be as low as $25, though paying more each month means you finish sooner and pay less interest overall.
A plan can run anywhere from a few months to six years, depending on your debt and payment amount. For example, if you owe $3,000 and pay $100 per month, you will finish in about 30 months. If you owe $10,000 and pay $150 per month, it will take roughly 67 months (5.5 years).
The IRS charges interest (the current rate is around 8 percent per year, though it changes quarterly) on your unpaid balance. The longer your plan runs, the more interest you pay. A payment calculator on IRS.gov can show you the total cost of different payment amounts.
What happens after you set up your plan
The IRS will send you a confirmation notice within two weeks. This letter includes your agreement number, monthly payment amount, and due date. Keep this letter for your records.
Make your payment on or before the due date each month. You can pay online at IRS.gov, by phone, by mail, or through automatic bank withdrawal. If you set up automatic withdrawal, the payment comes out on the same day each month.
While you are on a payment plan, you must file all future tax returns on time and pay any taxes due by the deadline. If you miss a payment or fail to file a return, the IRS can cancel your agreement and demand the full remaining balance immediately.
Changing your payment amount or plan type
If your financial situation changes and you cannot afford your current payment, contact the IRS and ask to modify your agreement. You can lower your monthly payment (though this extends how long the plan runs and increases total interest) or switch to a different plan type.
The IRS offers two main types of plans: a short-term extension (up to 180 days with no setup fee, for smaller debts) and a long-term installment agreement (the standard plan, which can run up to six years). If you are struggling, you can also ask about an offer in compromise, which lets you settle for less than you owe, though this requires proving financial hardship.
Call 1-800-829-1040 to discuss changes to your plan. The IRS may charge a small fee to modify your agreement, but it is usually less than the original setup fee.
Frequently Asked Questions
What if I miss a payment?
Contact the IRS as soon as possible. A single late payment does not automatically cancel your plan, but repeated missed payments will. The IRS may charge a penalty and interest on the late amount. If you know you cannot make a payment, call ahead and ask about options before the due date.
Can I pay off my plan early without a penalty?
Yes. You can pay your remaining balance at any time without penalty. Paying early saves you money on interest. There is no fee for early payoff.
Do I need a lawyer to set up a payment plan?
No. You can set up a plan yourself online, by phone, or by mail. A tax professional or attorney can help if your situation is complex (for example, if you owe back taxes from multiple years or have other IRS issues), but it is not required for a basic payment plan.
What if I owe more than $50,000?
You cannot use the online system. Call 1-800-829-1040 or mail Form 9465 instead. For debts over $50,000, the IRS may require a financial statement to determine what you can afford to pay each month.
Will a payment plan affect my credit score?
A payment plan itself does not appear on your credit report. However, the original tax debt may have been reported to credit bureaus before you set up the plan. Once you are current on your payments, the impact on your credit will gradually improve over time.