How to set up an IRS payment plan

The IRS lets you set up a payment plan — called an installment agreement — if you owe taxes but cannot pay the full amount right away. You can request one online 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 interest on the unpaid balance, but the plan stops the IRS from taking collection action like wage garnishment or bank levy while you are making regular payments.

The fastest route is the IRS Online Payment Agreement tool at irs.gov, which takes about 15 minutes and gives you approval the same day if you meet the income and debt limits. If you do not may have access to for the online tool, you can call the IRS at 1-800-829-1040 or send Form 9465 (Installment Agreement Request) by mail with your tax return or notice.

Key Takeaways

  • An installment agreement lets you pay your tax debt over time instead of in one lump sum, and stops collection actions while you are making payments.
  • The IRS Online Payment Agreement tool is the fastest way to set up a plan if you owe $50,000 or less and can access the internet.
  • Setup fees range from $31 to $225 depending on whether you apply online, by phone, or by mail, and interest continues to accrue on your unpaid balance.
  • You must make your first payment by the due date shown in your agreement, and missing a payment can end the plan and trigger collection action.
  • Short-term plans (120 days or less) have lower or no setup fees, while long-term plans (more than 120 days) cost more but spread payments over several years.

Types of payment plans the IRS offers

The IRS offers two main types of installment agreements: short-term and long-term. A short-term plan lets you pay off your debt in 120 days or less with no setup fee if you apply online. A long-term plan spreads payments over more than 120 days — typically 24 to 72 months — and costs a setup fee.

Within long-term plans, you can choose a standard agreement (you pick a fixed monthly payment amount) or a streamlined agreement (the IRS calculates your payment based on what you owe and how long you want to pay). Streamlined agreements have lower setup fees ($31 online, $225 by phone or mail) and are simpler to set up, but you have less control over the payment amount.

If you owe more than $50,000, you cannot use the online tool and must apply by phone or mail. The IRS may also require you to provide financial information (Form 433-F) to prove you cannot pay in full.

What you need before you apply

Gather your Social Security number or Individual Taxpayer Identification Number (ITIN), your tax year and the type of return you filed (1040, 1120, etc.), and the exact amount you owe. If you are applying online, have your bank account and routing number ready — the IRS requires you to pay by electronic bank withdrawal (called direct debit), which is the cheapest setup fee option.

If you received a notice from the IRS (like a CP14 or CP501), have that in front of you. The notice shows your balance, the tax year, and the deadline to respond. If you are applying by phone or mail, you will need to provide more detail about your income and expenses, so have recent pay stubs and bank statements available.

Do not wait for a collection notice to apply. You can request a payment plan as soon as you file your return or receive a bill, and doing so early can prevent the IRS from filing a lien against your property.

Steps to apply online through the IRS

Go to irs.gov and search for "Online Payment Agreement." You will land on a page with a button to start the application. The IRS will ask you to enter your Social Security number, date of birth, and the address on your most recent tax return to verify your identity.

Next, select the tax year you owe for and confirm the amount due. The system will show you payment plan options based on what you owe. Choose your plan type (short-term or long-term), and if you are on a long-term plan, enter your desired monthly payment amount. The IRS will tell you how many months the plan will run.

Then provide your bank account and routing number for direct debit. The IRS will charge the setup fee ($31 for online direct debit) to your account along with your first payment. Review the agreement terms, accept them, and submit. You will receive a confirmation number immediately and an email with your agreement details. Your first payment is due by the date shown on the agreement.

Applying by phone or mail if you do not may have access to online

Call the IRS at 1-800-829-1040 Monday through Friday, 7 a.m. to 7 p.m. your local time. Have your Social Security number, the tax year you owe for, and your account balance ready. A representative will walk you through the plan options and take your bank account information for direct debit. Setup fees are higher by phone ($225 for a long-term streamlined agreement) than online.

To apply by mail, fill out Form 9465 (Installment Agreement Request) and attach it to your tax return or the IRS notice you received. Include a check or money order for your first payment if you want to include it. Mail the form to the IRS address shown in your notice. Processing by mail takes 30 to 60 days, and you will receive a letter confirming your agreement.

If you owe more than $50,000 or cannot provide bank account information, the IRS may ask you to complete Form 433-F (Collection Information Statement) to review your ability to pay. This form asks about your income, expenses, and assets. Submitting it does not may provide approval, but it helps the IRS understand your situation.

What happens after your plan is approved

Once your agreement is approved, the IRS stops collection action like wage garnishment or bank levy. However, interest and penalties continue to accrue on your unpaid balance at the IRS interest rate (which changes quarterly). Your monthly payment covers part of the principal and part of the interest and penalties.

Make your first payment by the due date shown in your agreement. Set up a reminder or automatic payment through your bank to avoid missing a deadline. If you miss a payment, the IRS may terminate your agreement and resume collection action. If your financial situation changes and you cannot make the payment, contact the IRS immediately to modify the plan rather than defaulting.

You can modify your agreement online if you need to change your payment amount or due date. Go back to the IRS Online Payment Agreement tool and select "Modify Your Agreement." You can also call 1-800-829-1040 to request changes by phone.

Costs and how interest works on your payment plan

The setup fee depends on how you apply. Online direct debit costs $31 for a long-term streamlined agreement. Phone or mail costs $225 for streamlined, or $225 to $225 for a standard agreement (where you choose the payment amount). Short-term agreements (120 days or less) have no setup fee if you apply online.

Interest accrues daily on your unpaid balance at the federal interest rate plus 3 percent. The IRS publishes the interest rate quarterly; it changes on April 1, July 1, October 1, and January 1. Your monthly payment is calculated to cover interest first, then penalties, then principal. This means early payments reduce the total interest you pay over the life of the plan.

If you pay off your balance early, you can end the agreement without penalty. Some employers or tax refunds can be applied to your balance automatically, which speeds up repayment.

What to do if your payment plan is terminated

Your agreement ends if you miss a payment, fail to file future tax returns on time, or incur a new tax debt while the plan is active. The IRS will send you a notice of termination. Once terminated, the IRS can resume collection action, including wage garnishment, bank levy, or filing a lien.

If your plan is terminated, contact the IRS immediately. You may be able to reinstate the agreement if you can show reasonable cause for the missed payment (like a job loss or medical emergency). Otherwise, you can request a new agreement, though the IRS may require you to provide financial information or offer a higher monthly payment.

To avoid termination, make payments on time every month. If you are struggling to make the payment, call the IRS before the due date to request a temporary modification or hardship status, which may lower your payment or pause collection temporarily.

Frequently Asked Questions

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 can calculate what you owe. Once you file, you can request a payment plan immediately. If you are behind on filing, file as soon as possible — the longer you wait, the more penalties and interest accrue.

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

You can propose a lower payment amount when you apply, but the IRS may reject it if the payment is too small to cover interest and penalties. If that happens, ask about a Currently Not Collectible (CNC) status, which temporarily pauses collection while you work on your finances. Interest still accrues, but you are not required to make payments.

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 lien before you set up the plan, that lien may appear on your credit report and affect your score. Setting up a plan can prevent a lien from being filed in the first place.

Can I change my payment amount or due date after the plan starts?

Yes. You can modify your agreement online through the IRS Online Payment Agreement tool or by calling 1-800-829-1040. Changes usually take effect within one billing cycle. If you are facing a hardship, ask about temporary relief options.

What happens to my payment plan if I get a tax refund?

The IRS will automatically apply your refund to your payment plan balance, which reduces what you owe and speeds up repayment. You cannot opt out of this — it is automatic. This is actually helpful because it lowers your total interest cost.