What an IRS payment plan is and who can use one
An IRS payment plan (also called an installment agreement) lets you pay your tax debt in monthly chunks instead of all at once. The IRS offers this when you owe taxes but cannot pay the full amount by the deadline. You make regular monthly payments until the debt is cleared, and the IRS stops collection action while you are paying on time.
You can set up a payment plan whether you owe $600 or $600,000. There is no income limit. The main requirement is that you must file your tax return first — even if you cannot pay. The IRS will not set up a plan for a return you have not filed yet.
Payment plans come in two types: short-term (you pay within 180 days) and long-term (you pay over several years). Short-term plans have no setup fee. Long-term plans charge a one-time fee of $31 to $225 depending on how you set it up, plus interest and penalties on top of what you owe.
Key Takeaways
- You must file your tax return before requesting a payment plan, even if you cannot pay the full amount.
- Short-term plans (180 days or less) have no setup fee; long-term plans charge $31 to $225 depending on your method.
- You can set up a plan online through IRS.gov, by phone at 1-800-829-1040, or by mail using Form 433-D.
- Monthly payments depend on how much you owe and how long you want to pay; the IRS calculates this based on your request.
- If you miss a payment or fall behind on current taxes, the IRS can cancel the plan and resume collection action.
How to request a payment plan online or by phone
The fastest way to set up a payment plan is through the IRS website at IRS.gov. Go to the "Online Payment Agreement" tool and log in with your IRS username or ID.me account. You will enter your Social Security number, filing status, tax year, and the amount you owe. The tool will show you monthly payment options and let you choose a due date that works for your budget. You can complete the whole process in 10 to 15 minutes.
If you do not have an online account or prefer to speak to someone, call the IRS at 1-800-829-1040. A representative will ask the same questions and set up the plan over the phone. Wait times are usually shorter early in the morning or on weekdays. Have your Social Security number, filing status, and a rough idea of how much you can pay each month ready before you call.
Once your plan is approved, the IRS sends a confirmation letter within two weeks. This letter shows your monthly payment amount, due date, and account number. Keep this letter — you will need it if you have questions or want to change your payment date later.
Setting up a plan by mail with Form 433-D
If you cannot use the online tool or phone line, you can mail Form 433-D (Installment Agreement Request) to the IRS. Download the form from IRS.gov, fill it out with your name, Social Security number, tax year, and the monthly payment you propose. Include a check or money order for your first payment if you want to start right away.
Mail the form to the IRS address listed in your tax notice. Processing by mail takes 30 to 60 days, much longer than online or phone. Use this method only if you have no other option. Include a copy of your most recent tax notice so the IRS knows which debt you are paying on.
The IRS will review your proposed payment amount. If it is too low to clear the debt before the statute of limitations expires (usually 10 years), they may reject it and ask you to pay more per month. If that happens, you can negotiate or resubmit with a higher amount.
What happens after you are approved
Once approved, you make your monthly payment by the due date shown in your confirmation letter. You can pay by direct debit from your bank account (the easiest method), by credit or debit card through an approved payment processor, by check or money order, or through the IRS payment portal at IRS.gov/payments.
Direct debit is the cheapest option — there is no fee and you cannot forget a payment. If you pay by card, the payment processor charges a fee (usually $2 to $4). Checks and money orders have no fee but take longer to process.
Interest and penalties keep adding to your balance while you pay. The current interest rate is 8% per year, divided by 12 for each month. Penalties vary but are usually 0.5% per month of unpaid tax. These amounts are added to your balance automatically, so your final payment may be slightly higher than your first.
Fees and costs you will owe
Short-term plans (180 days or less) have no setup fee. Long-term plans charge a one-time fee based on how you set it up:
| Setup Method | Fee |
|---|---|
| Online or phone (direct debit) | $31 |
| Online or phone (other payment method) | $225 |
| By mail (Form 433-D) | $225 |
The fee is added to your first payment or charged separately — the IRS will tell you which when you are approved. On top of the fee, you owe interest (currently 8% per year) and penalties on the unpaid balance. These accrue monthly until the debt is paid off.
If you cannot afford the setup fee, you can request a fee waiver if your income is at or below 250% of the federal poverty line. Call 1-800-829-1040 to ask about a waiver.
What breaks a payment plan and what to do if it happens
Your payment plan will be cancelled if you miss a payment by more than 30 days, if you fail to file a new tax return on time while on the plan, or if you owe new taxes and do not pay them. When a plan is cancelled, the IRS resumes collection action — they can levy your bank account, garnish your wages, or place a lien on your property.
If you miss a payment, the IRS sends a notice. You have 30 days to make the payment before the plan is cancelled. If you know you cannot make a payment on time, call 1-800-829-1040 before the due date and ask to postpone it. The IRS can usually delay your payment by 30 to 120 days if you have a temporary hardship.
If your plan is cancelled and you want to restart, you can request a new one by phone, online, or mail using the same methods. However, the IRS may require you to pay a higher monthly amount or may deny a new plan if you have a history of missed payments.
Changing or ending your payment plan early
If your financial situation improves and you want to pay off the debt faster, you can increase your monthly payment or pay a lump sum at any time with no penalty. Call 1-800-829-1040 or log into your IRS account online to request a change.
If you want to lower your monthly payment because your income has dropped, you can request a modification. The IRS will review your situation and may approve a lower payment, though this extends how long you pay. You will need to provide recent pay stubs or proof of income.
You can also end the plan early by paying the remaining balance in full. There is no fee for paying early. Once the balance reaches zero, the IRS sends a final notice confirming the debt is cleared.
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, even if you cannot pay. The IRS needs to know exactly what you owe before they will set up a plan. If you have not filed, contact a tax preparer or the IRS at 1-800-829-1040 to file before requesting a plan.
What if I cannot afford the monthly payment the IRS suggests?
Call 1-800-829-1040 and explain your situation. You can propose a lower monthly payment, though this means you will pay for longer and owe more in interest and penalties. If your income is very low, ask about a Currently Not Collectible status, which pauses payments temporarily while interest still accrues.
Do I still owe penalties and interest while on a payment plan?
Yes. Interest (currently 8% per year) and penalties continue to accrue on your unpaid balance each month. These are added automatically, so your final payment will be higher than your first payment.
What happens if I get a refund while on a payment plan?
The IRS will keep your refund and apply it to your payment plan balance. You will not receive the refund as cash. This is automatic and happens without you having to do anything.
Can I have a payment plan and a wage garnishment at the same time?
Once you are approved for a payment plan, wage garnishments and bank levies stop. However, if you break the plan by missing payments, the IRS can resume garnishment or levy. Staying current on your plan payments prevents this.