How to Set Up a Payment Plan With the IRS

The IRS will let you pay your tax debt over time instead of all at once, and you can start the process online, by phone, or by mail

If you owe the IRS money and cannot pay the full amount, a payment plan (called an installment agreement) lets you make monthly payments until the debt is settled. The IRS charges interest and penalties on what you owe, and those continue to grow while you're on a plan, but a plan stops the IRS from taking more aggressive collection actions like wage garnishment or bank levies while you're making regular payments.

You can set up a plan yourself without hiring a tax professional. The fastest way is through the IRS website if you owe $50,000 or less. For larger debts or if you prefer to work by phone or mail, other routes are available. The IRS approves most requests as long as you're current on filing your tax returns and you're willing to commit to a monthly payment amount.

Key Takeaways

You can set up a payment plan online at IRS.gov if you owe $50,000 or less and have a Social Security number or ITIN.
Short-term plans (120 days or fewer) have no setup fee; long-term plans cost $31 to $225 depending on how you set it up and your income level.
The IRS continues to charge interest and penalties while you're on a plan, so the total amount you pay will be higher than what you originally owed.
You must stay current on filing future tax returns and make your monthly payments on time, or the IRS can cancel the plan and pursue collection actions.
If your circumstances change and you cannot afford your monthly payment, you can request a modification or explore other options like an Offer in Compromise.

Setting up a plan online through the IRS website

Go to IRS.gov and look for the Online Payment Agreement tool. You'll need your Social Security number or ITIN, your date of birth, and your filing status. The tool will ask you how much you owe and when you want to start paying. You can choose a payment date between the 1st and 28th of each month.

The system will show you what your monthly payment would be based on how long you want the plan to last. You can adjust the length of the plan to find a payment amount that fits your budget. Once you accept the terms, the IRS sends you a confirmation letter by mail within two weeks. Your first payment is due on the date you selected.

This route works only if you owe $50,000 or less in combined income tax, penalties, and interest. If you owe more, you'll need to call the IRS or work with a tax professional to set up what's called a long-term installment agreement.

Setting up a plan by phone or mail

Call the IRS at 1-800-829-1040 (the main customer service line) and tell them you want to set up a payment plan. Have your tax return information and a recent bill or notice ready. A representative will discuss your situation, confirm how much you owe, and help you choose a payment amount and schedule.

If you prefer to write, send Form 9465 (Installment Agreement Request) to the IRS address shown in your notice. Include a brief explanation of why you need a plan. Mail takes longer — typically four to six weeks for approval — but it creates a paper record of your request.

The phone route is usually faster and lets you ask questions in real time. The IRS is often busy, so call early in the morning or late in the week to wait less time.

Understanding setup fees and interest

The IRS charges a setup fee when you create a long-term plan (longer than 120 days). The fee ranges from $31 to $225 depending on how you set it up and your income. Online setup is cheaper than phone or mail. If your household income is below a certain threshold (the amount changes yearly), you may may have access to for a reduced fee of $31.

Beyond the setup fee, interest accrues on your unpaid balance every day until it's paid off. The interest rate is set quarterly and is tied to the federal short-term rate plus 3 percent. Penalties also continue to accrue — typically 0.5 percent of your unpaid tax per month. This means the longer your plan lasts, the more you'll pay in total.

A short-term plan (120 days or fewer) has no setup fee, which makes it worth considering if you can pay off the debt quickly. You can also pay off the plan early without penalty.

What the IRS requires to keep your plan active

Once your plan is approved, you must make every monthly payment on time. If you miss a payment, the IRS will send you a notice. If you miss payments for more than a few months, the IRS can cancel the plan and resume collection actions like levies or garnishment.

You must also file your tax return on time every year, even if you're on a payment plan. If you don't file, the IRS will cancel the agreement. If your income changes significantly or you face a hardship, contact the IRS before you miss a payment — they can modify the plan to lower your monthly amount.

Keep copies of your payment confirmation letter and any notices from the IRS. If you pay by check or money order, write your tax ID number and "1040" on the payment so it's applied correctly.

Modifying or ending your plan

If your financial situation changes and you cannot afford your current payment, call the IRS and ask to modify the plan. They can extend the timeline to lower your monthly payment, though this means paying more interest overall. Modification requests are usually approved if you're current on your payments.

If you come into money and want to pay off the plan early, you can do so without penalty. The IRS will calculate what you owe through the payoff date and send you a final bill. Paying early saves you interest and penalties going forward.

If you believe you cannot ever pay the full amount, you can explore an Offer in Compromise, which is a settlement for less than what you owe. This is a separate process with stricter requirements, and most people do not may have access to, but it's worth asking the IRS about if your situation is dire.

When a payment plan might not be the right choice

A payment plan works best if you can afford a monthly payment and expect to resolve the debt within a few years. If your debt is very large or your income is very low, the monthly payment might be unrealistic, and you could end up defaulting on the plan anyway.

If you're experiencing severe financial hardship, the IRS has a status called "Currently Not Collectible," which pauses collection actions while you recover. This doesn't erase the debt, but it stops interest and penalties from accruing and gives you breathing room. You can request this status by calling the IRS and explaining your situation.

Talk to a tax professional or call the IRS Taxpayer Advocate Service (1-877-777-4778) if you're unsure whether a payment plan, an Offer in Compromise, or a hardship status is the right path for your situation.

Frequently Asked Questions

Can I set up a payment plan if I owe back taxes from multiple years?

Yes. The IRS combines all your unpaid tax debt into one plan. The plan covers all years at once, and you make one monthly payment that covers everything. If you owe more than $50,000 total, you'll need to call the IRS or mail Form 9465 instead of using the online tool.

What happens if I miss a payment?

The IRS will send you a notice. If you miss one payment, contact the IRS right away and ask to catch up. If you miss multiple payments over several months, the IRS can cancel the plan and resume collection actions like wage garnishment or bank levy. If you know you'll miss a payment, call before the due date and ask about options.

Does a payment plan stop the IRS from garnishing my wages or levying my bank account?

Yes, as long as you're making your payments on time. Once you're approved for a plan, the IRS stops collection actions. If you default on the plan, they can resume those actions, so staying current is critical.

Can I change my monthly payment amount after the plan starts?

Yes. Call the IRS and ask to modify your plan. They can extend the timeline to lower your payment or shorten it if you want to pay faster. Modifications are usually approved if you're current on payments and have a legitimate reason for the change.

How long does it take to get approved for a payment plan?

Online approval is immediate, and you'll receive a confirmation letter within two weeks. Phone requests are approved on the call if everything checks out. Mail requests take four to six weeks. Once approved, your first payment is due on the date you selected.

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.