How to Set Up a Payment Plan With the IRS

Published on October 29, 20268 minute read

What an IRS payment plan does and who can use one

An IRS payment plan lets you pay your tax debt over time instead of in one lump sum. The IRS calls this an installment agreement. You set up a monthly payment amount, and the IRS collects it automatically from your bank account or by check until the debt is paid off. You still owe penalties and interest on top of the original amount, but a payment plan stops the IRS from taking more aggressive collection actions like wage garnishment or bank levies while you are making regular payments.

You can set up a payment plan if you owe federal income tax and cannot pay the full amount right now. There is no income limit or citizenship requirement. The IRS offers several types of plans depending on how much you owe and how quickly you can pay.

Key Takeaways

The IRS offers short-term plans (120 days or less) with no setup fee, and long-term plans (longer than 120 days) with a setup fee that ranges from $31 to $225 depending on how you pay.
You can set up a plan online through IRS.gov, by phone at 1-800-829-1040, or by mailing Form 9465 to the IRS address shown in your tax notice.
Monthly payments are automatically deducted from your bank account if you choose direct debit, which is the cheapest option and the fastest to set up.
The IRS will continue charging interest and penalties while you pay, so paying faster reduces the total amount you owe.
If you miss a payment or fall behind on current taxes, the IRS can cancel your plan and resume collection action.

Types of payment plans and what each one costs

The short-term payment plan covers tax debt of any amount and gives you up to 120 days to pay. There is no setup fee. You do not need to provide financial information. This plan works best if you know you can pay the full amount within four months.

The long-term installment agreement is for debt you cannot pay off within 120 days. Setup fees range from $31 to $225 depending on your income and how you pay. If your household income is below a certain threshold (the threshold changes yearly), you may may have access to for a reduced fee of $31. If you set up the plan online or by phone using direct debit from your bank account, the fee is lower than if you pay by check or other methods. Monthly payments are typically between $25 and several hundred dollars, depending on how much you owe and how long you want to take to pay it off.

The may provide installment agreement is available only if you owe $10,000 or less and can pay it off within three years. The setup fee is $31, and the IRS will not ask for detailed financial information. This is the simplest long-term option for smaller debts.

How to set up a payment plan online or by phone

The fastest way to set up a plan is through the IRS website at IRS.gov. Go to the "Online Payment Agreement" tool. You will need your Social Security number, date of birth, mailing address, and information from your most recent tax notice (the letter the IRS sent you showing what you owe). The tool will ask how much you can pay each month and calculate how long the plan will take. You can see the setup fee before you confirm. If you set up the plan online using direct debit, the fee is lower and the plan starts immediately.

If you prefer to call, phone the IRS at 1-800-829-1040. A representative will walk you through the same questions and set up the plan over the phone. This takes longer than the online tool, but you can ask questions as you go. The setup fee is the same whether you call or use the website.

If you do not have internet access or prefer to mail a form, you can print Form 9465 (Installment Agreement Request) from IRS.gov, fill it out, and mail it to the address shown in your tax notice. Include a check or money order for the setup fee if you are applying for a long-term plan. Mailing takes two to four weeks longer than applying online or by phone.

What information you need before you start

Gather these items before you begin:

Your Social Security number
Your date of birth
Your current mailing address
The tax notice or letter from the IRS showing the amount you owe (usually a CP notice or a bill)
Your bank account number and routing number if you want to pay by direct debit (this is optional but recommended because it lowers the fee)

If you are applying for a long-term plan and your household income is below the threshold for a reduced fee, you may need to provide proof of income. The IRS will tell you if this is required during the application process.

How much your monthly payment will be

Your monthly payment depends on three things: how much you owe, how long you want to take to pay it, and whether you are on a short-term or long-term plan. The IRS does not set a minimum monthly payment for long-term plans, but most people pay between $25 and $500 per month. You can choose how long you want the plan to last (up to six years for most debts), and the IRS will calculate the monthly amount based on that timeline.

When you apply online or by phone, the tool will show you different payment options. For example, if you owe $5,000, you might see options like $100 per month for 50 months, or $150 per month for 34 months. You choose which option works for your budget. Remember that interest and penalties continue to accrue, so a shorter plan means you pay less total interest.

If your financial situation changes and you cannot afford your monthly payment, you can contact the IRS and ask to modify the plan. The IRS may lower your payment or extend the timeline, but this will increase the total interest you pay.

What happens after your plan is approved

Once your plan is approved, the IRS will send you a confirmation letter. Keep this letter. It shows your monthly payment amount, the due date, and the account number for your plan. If you set up direct debit, the IRS will automatically withdraw your payment from your bank account on the date you chose each month. If you chose to pay by check, you will mail a check to the address shown in the confirmation letter.

While you are on the payment plan, you must file your tax return on time every year and pay any new taxes you owe. If you do not file or if you fall behind on current-year taxes, the IRS can cancel your plan without warning and resume collection action. You will also receive a bill for any penalties the IRS adds for breaking the agreement.

Interest and penalties continue to accrue on the unpaid balance. The longer your plan lasts, the more interest you will pay. If you receive a tax refund while you are on the plan, the IRS will apply it to your debt instead of sending it to you.

What to do if you cannot afford your payment or miss a payment

If you miss a payment, the IRS will send you a notice. You have a short window to make the payment or contact the IRS to explain. If you miss a payment by more than a few days, the IRS may cancel your plan. Once the plan is cancelled, the full remaining balance becomes due immediately, and the IRS can resume wage garnishment, bank levies, or other collection actions.

If your financial situation has changed and you cannot afford your monthly payment, contact the IRS before you miss a payment. Call 1-800-829-1040 and ask to modify your plan. The IRS may lower your payment amount or extend the timeline. You may need to provide updated financial information. Modifying a plan takes one to two weeks.

If you are facing a serious hardship, you can ask the IRS to place your account in currently not collectible status. This temporarily pauses collection action and stops monthly payments, but interest and penalties still accrue. This is a temporary measure, not a permanent solution.

Frequently Asked Questions

Can I set up a payment plan if I owe penalties and interest on top of the original tax?

Yes. The payment plan covers the original tax, penalties, and interest all together. Interest and penalties continue to accrue while you pay, so the longer your plan lasts, the more you will owe in total. Paying faster reduces the total amount of interest you pay.

What if I already have a payment plan and my situation changed?

Contact the IRS at 1-800-829-1040 and ask to modify your plan. You can lower your monthly payment, extend the timeline, or change your payment method. The IRS may ask for updated financial information. Modifying a plan usually takes one to two weeks.

Will setting up a payment plan affect my credit score?

The IRS does not report to credit bureaus, so a payment plan itself does not appear on your credit report. However, if the IRS filed a tax lien before you set up the plan, that lien may appear on your credit report and affect your score. Once you pay off the debt, you can ask the IRS to release the lien.

Can I pay off my plan early without a penalty?

Yes. You can pay off your plan at any time without penalty. Paying early reduces the amount of interest you owe. Send extra payments to the address shown in your confirmation letter and note your account number on the check.

What if I cannot find my tax notice or do not know how much I owe?

Call the IRS at 1-800-829-1040 and provide your Social Security number and tax year. A representative will tell you the amount owed and can help you set up a plan over the phone. You can also create an account on IRS.gov to view your account balance online.