The IRS lets you pay what you owe in installments through a payment plan, rather than in one lump sum.

If you owe federal income tax and cannot pay the full amount by the deadline, you can request a payment plan (also called an installment agreement) directly from the IRS. The agency will let you spread payments over months or years, depending on how much you owe and what you can afford. You set up the plan yourself online, by phone, or by mail — there is no application process or approval decision that takes weeks. Most people get an answer the same day.

The IRS charges a setup fee (usually between $31 and $225, depending on the method you use) and interest on the unpaid balance. The interest rate changes quarterly. You will owe more total than if you paid in full, but a payment plan stops the IRS from taking collection action like wage garnishment or bank levy while you are making regular payments.

Key Takeaways

  • You can set up a payment plan online at IRS.gov, by calling the IRS at 1-800-829-1040, or by mailing Form 9465 to the address on your tax notice.
  • Short-term plans (120 days or less) have a lower setup fee than long-term plans, so paying faster costs less in fees.
  • The IRS charges interest and penalties on the unpaid balance each month, so the total you pay will exceed what you originally owed.
  • Missing a payment can end the plan and trigger collection action, so set up automatic payments from your bank account if possible.
  • If your financial situation changes, you can modify or cancel the plan by contacting the IRS.

Setting up a payment plan online

The fastest way to set up a payment plan is through the IRS Online Payment Agreement tool at IRS.gov. You will need your Social Security number or Individual Taxpayer Identification Number, your filing status, the tax year you owe for, and your bank account or debit card information if you want to pay by electronic transfer.

The tool walks you through selecting a payment amount and due date. You can choose to pay monthly, biweekly, or on a custom schedule. Once you submit, you get a confirmation number immediately. The IRS will send you a formal notice by mail within a few weeks that spells out the terms of your plan.

Online setup works only if you owe $50,000 or less in combined tax, penalties, and interest. If you owe more, you will need to call the IRS or mail Form 9465 instead.

Calling the IRS to arrange payments

You can 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, the tax year you owe for, and your bank account details ready. A representative will discuss what you can afford to pay each month and set up the plan over the phone.

Phone setup takes longer than online — you may wait on hold — but a representative can answer questions about your specific situation and may be able to work with you if you owe more than $50,000. If you cannot reach someone, the IRS will call you back if you leave a callback number.

Mailing Form 9465 to the IRS

You can request a payment plan by mailing Form 9465 (Installment Agreement Request) with your tax return or notice. The form asks for the amount you want to pay each month and when you want payments due. Mail it to the address shown on your tax notice or return.

Processing by mail takes longer — typically two to four weeks — and you will not know if the IRS accepted your plan until you receive a response. If you need a payment plan before your next notice arrives, use the online tool or phone instead.

Understanding setup fees and interest charges

The IRS charges a one-time setup fee when you create a payment plan. The fee depends on how you set it up and how long the plan lasts. Online setup costs $31 for a short-term plan (120 days or less) or $225 for a long-term plan. Phone or mail setup costs $225 for a long-term plan. If you set up automatic payments from your bank account, the fee drops to $31 regardless of plan length.

On top of the setup fee, you pay interest on any unpaid tax balance. The interest rate is set by the IRS each quarter and is currently in the range of 8 to 9 percent annually, though this changes. You also continue to owe any penalties that were assessed on your original bill. Interest and penalties accrue monthly until the balance is paid in full.

The longer your plan runs, the more interest you will pay overall. A short-term plan costs less in interest but requires higher monthly payments. A long-term plan spreads the cost over more months but costs more in total interest.

What happens if you miss a payment

If you miss a payment, the IRS will send you a notice. If you miss a payment by more than 30 days, the IRS can end the plan and resume collection action — including wage garnishment, bank levy, or a tax lien on your property. Once the plan ends, you owe the full remaining balance immediately.

If you know you cannot make a payment on time, contact the IRS before the due date. You may be able to delay the payment, adjust the plan, or work out a temporary arrangement. Calling ahead is much better than missing the payment and dealing with the consequences afterward.

Setting up automatic payments from your bank account reduces the risk of missing a payment. The IRS will deduct the agreed amount on the date you choose each month. This also qualifies you for the lower setup fee.

Changing or ending your payment plan

If your financial situation improves and you want to pay off the plan early, you can do so without penalty. Simply send a check for the remaining balance to the address on your payment plan notice.

If your situation worsens and you cannot afford your current payment amount, you can request to modify the plan. Call the IRS at 1-800-829-1040 or log into your IRS account online to adjust your monthly payment or extend the plan. The IRS may charge a modification fee (usually $31 to $225) depending on how you make the change.

If you want to cancel the plan entirely, contact the IRS in writing or by phone. Canceling ends the plan and means the full remaining balance becomes due. This is rarely a good option unless your situation has changed dramatically.

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 knows what you owe. Once you file, you can request a payment plan immediately, even if you have not received a bill yet. Filing on time also keeps you from owing additional failure-to-file penalties.

What if I owe back taxes from multiple years?

You can include all years in a single payment plan. When you set up the plan online or by phone, tell the IRS which tax years you owe for, and they will combine the amounts into one monthly payment. The plan covers all years at once.

Do I have to make payments every month?

You can choose the payment frequency when you set up the plan. Most people pay monthly, but you can also arrange biweekly payments or a custom schedule. The more often you pay, the faster the plan ends and the less interest you pay overall.

What if I cannot afford any monthly payment right now?

If you are in severe financial hardship, you may be able to request a temporary delay or a very small payment amount. Contact the IRS at 1-800-829-1040 to discuss your situation. The IRS also has a hardship program that may reduce or pause collection action while you recover.

Will a payment plan hurt my credit score?

A payment plan itself does not appear on your credit report. However, if the IRS files a tax lien (a legal claim against your property), that lien will show up on your credit report and damage your score. Setting up a payment plan before a lien is filed helps protect your credit.