You can set up a payment plan with the IRS if you owe taxes but cannot pay the full amount right away
The IRS calls this an installment agreement. You make monthly payments toward what you owe instead of paying it all at once. The IRS offers several types of plans, ranging from short-term arrangements (120 days or less) to long-term plans that can stretch across years. Each type has different fees and approval processes.
You do not need to wait for the IRS to contact you. You can request a plan as soon as you know you will owe money, or after you receive a bill. The sooner you set one up, the fewer penalties and interest charges pile up while you are paying.
Key Takeaways
- The IRS offers short-term plans (up to 120 days with no setup fee) and long-term installment agreements (monthly payments over months or years with a setup fee of $31 to $225 depending on your method).
- You can request a plan online through IRS.gov, by phone at 1-800-829-1040, or by mail using Form 9465 if you prefer not to use the website.
- The IRS will review your request and either approve it, deny it, or propose different terms; approval typically takes two to four weeks by mail or a few days online.
- Once approved, you must make every payment on time or the agreement can be terminated and the full balance becomes due immediately.
- Interest and penalties continue to accrue on the unpaid balance, so paying faster reduces the total amount you owe.
Short-term payment plans for amounts under $100,000
A short-term payment plan lets you pay off your tax debt within 120 days. There is no setup fee, and you do not have to provide financial information. This plan works if you can pay the full amount within four months.
You request this plan the same way as a long-term agreement—online, by phone, or by mail. The IRS will tell you the exact amount due each month to clear the debt in 120 days. If you miss a payment or cannot meet the deadline, you can convert to a longer-term plan, but you will then pay the setup fee.
Long-term installment agreements and setup fees
A long-term installment agreement spreads your payments over months or years. The setup fee ranges from $31 to $225, depending on how you request the plan and your income level. If you request online and set up automatic payments from your bank account, the fee is lower ($31 to $225 depending on income). If you request by phone or mail, or if you do not use automatic payments, the fee is higher.
The IRS calculates your monthly payment based on how much you owe and how long you want the plan to last. You can propose a payment amount you can afford, but the IRS may reject it if it would take too long to pay off the debt. Generally, the IRS wants the debt paid within six years, though longer plans are possible for larger amounts.
Once the agreement is in place, you must pay by the due date each month. The IRS accepts payments online, by phone, by mail, or through automatic bank withdrawal. Automatic withdrawal is the most reliable method and qualifies you for the lower setup fee.
How to request a plan online, by phone, or by mail
Online through IRS.gov is the fastest route. Go to IRS.gov and search for "payment plan" or "installment agreement." You will need your Social Security number, date of birth, filing status, and the tax year(s) you owe for. The system will show you available plan options and let you choose your monthly payment amount. You can set up automatic payments immediately. Approval usually takes a few days, and you can start paying right away.
By phone, call the IRS at 1-800-829-1040. A representative will walk you through the process, answer questions about your options, and set up the plan over the phone. This takes 20 to 30 minutes. You will need the same information as the online method. Approval by phone typically takes a few days as well.
By mail, fill out Form 9465 (Installment Agreement Request) and send it to the IRS address shown in your tax bill or notice. Include a copy of the bill or notice with your form. Mail approval takes two to four weeks. This method is slower but works if you do not have internet access or prefer not to call.
What the IRS will ask about and what happens next
The IRS will ask how much you owe, which tax years, and your current income and expenses. For online requests, you may not need to provide detailed financial information if you are requesting a short-term plan or a small monthly payment. For phone or mail requests, especially for larger amounts or longer plans, the IRS may ask for a Collection Information Statement (Form 433-F for individuals). This form lists your income, expenses, assets, and debts so the IRS can verify you cannot pay faster.
After you submit your request, the IRS will send you a notice with the decision. If approved, the notice will show your monthly payment amount, due date, and how to pay. If denied, the notice will explain why and may offer alternatives. If the IRS proposes different terms than you requested, you have the right to reject the offer and try again or request a hearing.
Once approved, your plan is binding. You must make every payment on time. If you miss a payment or fall behind, the IRS can terminate the agreement and demand full payment of the remaining balance immediately. If your financial situation changes and you cannot afford the payment, contact the IRS right away to modify the plan rather than missing payments.
Interest and penalties continue while you pay
A payment plan does not stop interest or penalties from accruing. The IRS charges interest on unpaid taxes (currently around 8 percent per year, though the rate changes quarterly) and adds failure-to-pay penalties (typically 0.5 percent per month of the unpaid balance). These charges add to your total debt each month until it is fully paid.
This means the longer your plan lasts, the more you will pay in total. If you can afford to pay faster—by making larger monthly payments, paying a lump sum when you have the money, or shortening the plan—you will reduce the interest and penalties that pile up. The IRS will not penalize you for paying early or paying more than the required monthly amount.
What to do if your request is denied or you cannot afford the payment
If the IRS denies your request, the notice will state the reason. Common reasons include owing less than $25,000 but requesting a plan longer than 60 months, or having a history of missed payments on previous agreements. You can request reconsideration by responding to the notice within 30 days, or you can request a hearing with the IRS Office of Appeals.
If you cannot afford the monthly payment the IRS proposes, you can request a modification. Contact the IRS at 1-800-829-1040 or submit a new Form 9465 with a lower proposed payment. The IRS may accept a lower payment if you can show your income and expenses support it. In rare cases, if you truly cannot pay anything right now, the IRS may place your account in currently not collectible status, which pauses collection action temporarily while interest and penalties continue to accrue.
Frequently Asked Questions
Can I set up a payment plan before I file my tax return?
No. You must file your return first so the IRS knows how much you owe. However, you can request a plan as soon as you file, even before you receive a bill or notice from the IRS. This stops penalties from growing while you arrange to pay.
What happens if I miss a payment?
The IRS will send you a notice. If you miss one payment, contact the IRS immediately to catch up or modify the plan. If you miss multiple payments or ignore notices, the IRS can terminate the agreement and pursue collection action, including wage garnishment or bank levies.
Can I pay off my plan early without a penalty?
Yes. You can pay the full remaining balance at any time without penalty. Paying early reduces the interest and penalties that continue to accrue, so it saves you money overall.
Do I need a lawyer or tax professional to request a payment plan?
No. You can request a plan directly through the IRS website, by phone, or by mail at no cost. A tax professional or enrolled agent can help if you have a complex situation or want representation, but it is not required.
Will a payment plan affect my credit score?
A payment plan itself does not appear on your credit report. However, if the IRS filed a tax lien (a public notice that you owe taxes), that lien will appear on your credit report and affect your score. Setting up a payment plan does not remove a lien, but paying off the debt in full will allow the IRS to release it.