How to Set Up a Payment Plan With the IRS

The IRS lets you pay your tax debt over time through a formal agreement called an installment agreement

If you owe the IRS and cannot pay in full, you can request an installment agreement — a written plan where you make monthly payments until the debt is settled. The IRS offers several types of plans depending on how much you owe and your financial situation. You set this up by contacting the IRS directly, either online, by phone, or by mail. The IRS will not remove the debt or reduce what you owe, but a payment plan stops collection actions like wage garnishment or bank levies while you pay.

The process takes a few weeks to a few months, depending on which plan you choose and how you apply. Once approved, you make regular monthly payments on a schedule you agree to. If you miss a payment or your financial situation changes, you must contact the IRS to modify the plan or risk default.

Key Takeaways

The IRS offers short-term plans (120 days or fewer) for smaller debts and long-term installment agreements for larger amounts.
You can request a plan online through IRS.gov, by phone at 1-800-829-1040, or by mailing Form 9465 to the IRS address on your notice.
The IRS charges a setup fee (usually $31 to $225 depending on the plan type and how you apply) and may add interest and penalties to your balance while you pay.
A payment plan stops collection actions like wage garnishment or bank levies, but you must make payments on time or the agreement can be terminated.
If your income or expenses change significantly, you can request a modification to lower your monthly payment.

Types of payment plans the IRS offers

The short-term payment plan is for debts of $10,000 or less that you can pay off within 120 days. There is no setup fee, and you do not need to provide financial information. You simply tell the IRS when you will pay the full amount. This is the fastest option if you can settle the debt quickly.

The long-term installment agreement is for debts over $10,000 (or any amount if you need more than 120 days). You must provide financial details on Form 433-F (a short financial statement) or Form 433-A (a detailed one). The IRS uses this information to set a monthly payment amount based on what you can afford. Setup fees range from $31 to $225 depending on whether you apply online, by phone, or by mail, and whether you set up automatic payments.

A streamlined installment agreement is available if you owe $50,000 or less in combined individual income tax, penalties, and interest. You do not have to provide detailed financial information, and the setup fee is lower ($31 if you use automatic payments, $225 otherwise). This is faster than a full agreement but still requires you to make regular monthly payments.

How to request a payment plan online

The fastest way to set up a plan is through the IRS Online Payment Agreement tool on IRS.gov. Go to the IRS website, search for "Online Payment Agreement," and follow the prompts. You will need your Social Security Number or Individual Taxpayer Identification Number, your filing status, the tax year(s) you owe for, and your bank account information if you want automatic payments. The tool will calculate how much you can pay each month based on the total debt and the timeframe you choose.

If you are approved online, you will receive a confirmation number immediately. The agreement becomes effective once the IRS processes it, usually within a few days. You can print the agreement or save it to your records. Automatic payments (where the IRS withdraws from your bank account each month) have a lower setup fee and reduce the chance of missing a payment.

Requesting a plan by phone or mail

You can call the IRS at 1-800-829-1040 to request a payment plan. Have your tax return, notice of what you owe, and financial information ready. A representative will discuss your situation, determine which plan type fits, and set up the agreement over the phone. You will receive a confirmation number and a written agreement in the mail within two to three weeks.

To request by mail, fill out Form 9465 (Installment Agreement Request) and send it with your tax notice to the IRS address shown on that notice. Include a brief explanation of why you need a payment plan. Mail processing takes longer — typically four to six weeks — but this method creates a paper record of your request. Keep a copy for your records and track when the IRS receives it.

Setup fees and interest that continue to accrue

The IRS charges a setup fee to establish a payment plan. If you apply online or by phone and set up automatic payments, the fee is $31. If you apply by mail or phone without automatic payments, the fee is $225. These fees are added to your total debt, so you pay them as part of your monthly installment.

While you are on a payment plan, the IRS continues to charge interest on the unpaid balance at the federal rate (which changes quarterly) plus a penalty rate. This means your total debt grows slightly each month even as you make payments. The longer your plan, the more interest and penalties you will pay overall. If you can pay faster, you will save money on interest.

What happens after you are approved

Once your agreement is approved, the IRS will send you a written notice with your monthly payment amount, due date, and payment instructions. You must make payments on time each month. You can pay by check, money order, electronic funds withdrawal, credit card, or debit card through the IRS website or a third-party payment processor (which may charge a convenience fee).

If you miss a payment or pay late, contact the IRS immediately. One missed payment can terminate your agreement, and the IRS can resume collection actions. If your financial situation changes — you lose income or have a major expense — you can request a modification to lower your monthly payment. Call 1-800-829-1040 or use the Online Payment Agreement tool to modify an existing plan.

When a payment plan may not be the best option

A payment plan stops collection actions but does not reduce the amount you owe. If your debt is very large or your income is very low, monthly payments might be unaffordable even on a long-term plan. In those cases, you might explore an Offer in Compromise (where the IRS may settle for less than you owe) or Currently Not Collectible status (where the IRS pauses collection temporarily while you recover financially).

If you have unpaid taxes from multiple years or owe both income tax and other debts, a payment plan covers only the IRS debt. You will still need to address other obligations separately. A tax professional or the IRS Taxpayer Advocate Service can help you understand whether a payment plan, an offer, or another option makes sense for your situation.

Frequently Asked Questions

Can I set up a payment plan if I have an active wage garnishment or bank levy?

Yes. Requesting a payment plan does not automatically stop a garnishment or levy, but once the IRS approves your agreement, collection actions should pause. Contact the IRS immediately after approval to confirm the garnishment or levy has been released. If it continues, call 1-800-829-1040 to report it.

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

You can request a modification to lower the payment. Call 1-800-829-1040 or use the Online Payment Agreement tool. The IRS will ask for updated financial information. If your income is very low, you may be placed in Currently Not Collectible status instead, which pauses payments temporarily.

Do I need a lawyer or tax professional to set up a payment plan?

No. You can set up a plan yourself online, by phone, or by mail. However, if your situation is complex — multiple years of debt, a business, or significant financial hardship — a tax professional or the IRS Taxpayer Advocate Service can guide you through the process.

What happens if I pay off the debt early?

You can pay off the full balance at any time without penalty. Contact the IRS to confirm the exact amount owed (including current interest and penalties) before sending a final payment. Once paid in full, the agreement ends and your tax debt is resolved.

Will a payment plan affect my credit score?

A payment plan itself does not appear on your credit report. However, the original unpaid tax debt may have been reported to credit bureaus before you set up the plan. Once you complete the payment plan, the debt is satisfied, and your credit can begin to recover over time.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.