How to Set Up a Payment Plan With the IRS
What the IRS payment plan does and who can use it
An IRS payment plan lets you pay what you owe in monthly installments instead of a lump sum. The IRS offers several types of plans depending on how much you owe and how quickly you can pay. You can set one up online, by phone, or through a tax professional, and the process usually takes a few days to a few weeks.
The IRS charges interest and penalties on unpaid taxes from the moment the tax is due, whether or not you have a plan. A payment plan does not stop these charges—it only lets you spread the payments over time. You will still owe the full amount plus interest and penalties by the end of the plan.
You can request a payment plan if you owe federal income tax, self-employment tax, or other federal taxes. You do not need to prove hardship to get one. The main requirement is that you file your tax return on time (or request an extension) and that you stay current on any taxes due after you set up the plan.
Key Takeaways
- The IRS offers short-term plans (120 days or fewer) and long-term installment agreements that can run several years, depending on what you owe.
- You can set up a plan online through IRS.gov, by calling the IRS at 1-800-829-1040, or through a tax professional without paying a setup fee upfront.
- Interest and penalties continue to accrue on the unpaid balance, so the longer your plan runs, the more you will owe in total.
- If you miss a payment or fall behind on current taxes, the IRS can terminate the plan and pursue collection action.
- The monthly payment amount depends on how much you owe and how long you want the plan to last; lower monthly payments mean a longer plan and more interest paid overall.
Short-term plans: 120 days or less
A short-term plan is the simplest option if you can pay off what you owe within 120 days. You do not pay a setup fee, and you can request one online through the IRS website or by phone. The IRS will tell you the exact due date for the full balance when you set up the plan.
This option works best if you expect a refund, bonus, or other money coming in soon. Because the plan is short, interest and penalties add less to what you owe compared to a longer plan. However, if you cannot pay the full amount by day 120, you will need to request a long-term plan before the short-term plan ends.
Long-term installment agreements: months or years
A long-term installment agreement spreads your payments over many months or years. The IRS offers two main types: a may provide plan and a streamlined plan. The may provide plan is available to anyone who owes $10,000 or less and can pay within three years. The streamlined plan is for people who owe $50,000 or less and can pay within six years.
For amounts over $50,000, you will need to work with the IRS directly to set up a plan. The IRS may ask for financial information to determine how much you can afford to pay each month. If you owe significantly more, the IRS may require a formal financial statement or may suggest an Offer in Compromise (a separate process where you propose to settle for less than you owe).
The setup fee for a long-term plan varies. If you set it up online, the fee is usually lower than if you set it up by phone or mail. Fees range from roughly $30 to $225 depending on the method and your income level. The IRS may waive or reduce the fee if your income is below a certain threshold.
How to request 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, enter your Social Security number or Individual Taxpayer Identification Number (ITIN), tax year, and the amount you owe. The tool will show you available plan options and monthly payment amounts. You can accept the plan immediately and receive confirmation.
If you prefer to speak with someone, call the IRS at 1-800-829-1040. Have your tax return, Social Security number, and information about what you owe ready. The IRS representative will walk you through the options and set up the plan over the phone. This method takes longer but may be helpful if your situation is complicated or if you have questions.
You can also request a plan by mail using Form 9465 (Installment Agreement Request). Mail it to the IRS address shown in your notice. This method is slower—it can take several weeks—but it is an option if you do not have internet access or prefer written communication.
What happens after you set up a plan
Once your plan is approved, the IRS will send you a notice confirming the monthly payment amount and due date. Payments are usually due on the 15th or 28th of each month, depending on what you choose. You can pay by check, money order, electronic funds withdrawal (EFW), credit card, or debit card through the IRS website or an approved payment processor.
Interest and penalties continue to accrue on the unpaid balance each month. This means your total debt grows even as you make payments. The longer your plan runs, the more interest you will pay. For example, a plan that runs five years will cost significantly more in interest than a plan that runs two years, even if the monthly payment is lower.
You must stay current on any new taxes that come due while you are on the plan. If you file a new return and owe additional tax, you need to pay that on time or request a separate plan for it. If you miss a payment on your existing plan or fall behind on new taxes, the IRS can terminate the agreement and take collection action, including wage garnishment or bank levy.
Changing or ending your payment plan
If your financial situation changes and you can afford to pay more, you can request a shorter plan or larger monthly payments. This reduces the total interest you pay. You can modify your plan online, by phone, or by contacting the IRS in writing.
If you receive a large sum of money—a bonus, inheritance, or tax refund—you can pay down the balance early without penalty. The IRS will not charge you extra for paying ahead of schedule. When the balance reaches zero, the plan ends and your debt is satisfied.
If you cannot afford your current monthly payment, you can request a modification to lower it. This extends the plan and increases total interest, but it may prevent the IRS from taking collection action. Contact the IRS as soon as you know you will have trouble making a payment.
When a payment plan may not be your best option
If you owe a very large amount and cannot realistically pay it off within a reasonable timeframe, an Offer in Compromise may be worth exploring. This is a formal request to settle your tax debt for less than the full amount owed. It is harder to get approved for than a payment plan, and the IRS will examine your income and assets carefully, but it can result in a lower total debt.
If you are experiencing severe financial hardship, you may be able to request Currently Not Collectible (CNC) status. This temporarily pauses collection action while you recover financially. Interest and penalties still accrue, but the IRS will not pursue wage garnishment or bank levies during this period. CNC status is not permanent—the IRS can resume collection efforts later.
A payment plan is usually the right choice if you can afford monthly payments and want to resolve your debt over time. It is simpler than an Offer in Compromise and does not require proving hardship like CNC status does.
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. Filing on time (or requesting an extension) is a requirement for setting up a payment plan. If you file late without requesting an extension, you will owe additional penalties on top of the tax and interest.
What if I miss a payment on my plan?
Contact the IRS immediately. A single missed payment does not automatically end your plan, but if you miss payments repeatedly or fall behind on current taxes, the IRS can terminate the agreement. If that happens, the full remaining balance becomes due, and the IRS may pursue collection action like wage garnishment or bank levy.
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 appear on your credit report and harm your score. Setting up a payment plan does not prevent a lien from being filed, but it may reduce the likelihood if you are making good-faith payments.
Can I pay off my plan early without a penalty?
Yes. You can pay the remaining balance at any time without extra charges. Paying early reduces the total interest you owe. If you receive a bonus, tax refund, or other money, applying it to your plan balance is usually a smart financial move.
What if my income changes and I cannot afford my monthly payment?
Contact the IRS and request a modification. You can lower your monthly payment, which extends the plan and increases total interest, or you can explore other options like Currently Not Collectible status if you are in severe hardship. Acting before you miss a payment is important.