How to Set Up a Payment Plan With the IRS

Yes, you can set up a payment plan with the IRS if you owe back taxes

The IRS offers installment agreements that let you pay what you owe in monthly chunks instead of a lump sum. You do not need to wait for the IRS to contact you — you can request one yourself, and the sooner you do, the more options you have. The IRS has three main types of plans: short-term (120 days or less), long-term (more than 120 days), and one designed specifically for people who owe less than $50,000.

Setting up a plan does not erase the debt or stop interest and penalties from accruing. It straightforward gives you time to pay. The IRS will charge a setup fee (usually $31 to $225, depending on the plan type and how you set it up) and will continue to charge interest on the unpaid balance at a rate set quarterly.

Key Takeaways

You can request an installment agreement directly from the IRS by phone, mail, or online through IRS.gov without waiting for the IRS to contact you first.
The IRS charges a setup fee ($31 to $225) and continues to charge interest and penalties on the unpaid balance throughout the life of the plan.
A short-term plan covers 120 days or less; a long-term plan spreads payments over months or years and requires a financial disclosure form.
If you set up a plan online through the IRS website, you can do it when ready without speaking to anyone, though phone and mail routes also work.
Missing a payment on your plan can result in the agreement being terminated and the full balance becoming due when ready.

The three types of IRS payment plans and what each one costs

The short-term plan is for people who can pay off what they owe within 120 days. You do not need to provide financial information, and the setup fee is $31 if you pay by direct debit from your bank account, or $225 if you pay by check or credit card. This plan is the fastest route if you genuinely can clear the debt in four months.

The long-term installment agreement is for balances that will take longer than 120 days to pay. This is the most common plan. You must complete Form 433-F (a one-page financial statement) or Form 433-A (a longer form if the IRS asks for more detail). The setup fee is $31 if you use direct debit, $225 otherwise. Monthly payments are typically $25 to $200, though the IRS calculates the exact amount based on what you owe and how long you want the plan to last.

The streamlined installment agreement is available if you owe $50,000 or less in combined income tax, penalties, and interest. You do not need to submit financial forms, and the setup fee is $31 with direct debit or $225 without. This plan is designed to be faster and simpler than the standard long-term agreement.

How to request a payment plan online, by phone, or by mail

Online through IRS.gov is the fastest method. Go to IRS.gov, search for "Online Payment Agreement," and you will reach a tool that lets you set up a short-term or streamlined agreement when ready. You will need your Social Security number, date of birth, and the amount you owe. If you are setting up a plan for a business, you will need your Employer Identification Number instead. The system will tell you whether you may have access to for a streamlined agreement or must use a short-term plan. You can choose direct debit or another payment method, and the agreement takes effect once you confirm.

By phone, call the IRS at 1-800-829-1040 (the main IRS line). Have your tax return information and Social Security number ready. A representative will walk you through the options, calculate your monthly payment, and set up the agreement on the call. This route takes 20 to 30 minutes but gives you a chance to ask questions. If you owe more than $50,000 or need a longer payment period, the IRS may ask you to mail in Form 433-A.

By mail, send Form 9465 (Installment Agreement Request) to the IRS address shown on your tax notice. Include a check or money order for the setup fee if you want to pay it upfront, or the IRS will add it to your first payment. Mail takes 30 to 60 days to process. This route is slower but works if you do not have internet access or prefer not to call.

What happens after you set up a plan

Once your agreement is approved, the IRS will send you a confirmation letter with your monthly payment amount, due date, and payment instructions. You can pay by direct debit (the cheapest option, with a $31 setup fee), by check, by credit or debit card (through a third-party processor, which charges a convenience fee), or by electronic federal tax payment system (EFTPS). Set up automatic payments if possible — missing a payment can trigger termination of the agreement and make the full balance due when ready.

Interest continues to accrue on the unpaid balance. The IRS charges interest at a rate set quarterly; as of early 2024, the rate is 8 percent per year, but this changes. Penalties also continue unless you have a legitimate reason for the original underpayment (such as reasonable cause for not filing on time). You can reduce the total interest paid by paying faster than required — there is no penalty for early payment.

If your financial situation changes and you cannot afford the monthly payment, you can contact the IRS to modify the agreement. You will need to provide updated financial information. The IRS may lower your payment or extend the plan, though this means more interest accrues overall.

What disqualifies you from setting up a plan or causes one to be cancelled

You cannot set up a new installment agreement if you are already in default on a previous IRS agreement. The IRS will require you to resolve the default first, which usually means paying the missed amount in full or requesting a modification. If you have filed for bankruptcy, the IRS may not allow a new agreement until the bankruptcy is resolved.

An existing agreement is terminated if you miss a payment by more than 30 days. Once terminated, the full unpaid balance becomes due when ready, and the IRS may begin collection action (wage garnishment, bank levy, or tax refund offset). If you miss a payment, contact the IRS right away — sometimes they will reinstate the agreement if you can explain the miss and catch up quickly.

If you fail to file a required tax return or fail to pay a required estimated tax payment during the agreement, the IRS can also terminate it. This is why it is important to stay current on new tax obligations while paying off old ones.

How long a payment plan typically lasts

A short-term plan lasts up to 120 days — roughly four months. A long-term plan can last anywhere from one year to six years, depending on how much you owe and what monthly payment you can afford. The IRS generally will not extend a plan beyond six years unless there are unusual circumstances.

The longer the plan, the more interest you pay overall. For example, if you owe $10,000 and set up a three-year plan at 8 percent annual interest, you will pay roughly $1,300 in interest. If you stretch it to six years, you will pay roughly $2,600 in interest. Paying faster saves money, but the monthly payment must be realistic — if you cannot afford it, the agreement will fail.

Frequently Asked Questions

Can I set up a payment plan if I am being audited?

Yes. An audit and a payment plan are separate processes. You can set up a plan while an audit is ongoing. However, if the audit results in a larger tax bill, you may need to modify the plan to account for the new amount owed.

What if I cannot afford the monthly payment the IRS calculated?

Contact the IRS and request a modification. You will need to provide updated financial information (usually Form 433-F or 433-A). The IRS may lower the payment or extend the plan length, though this increases the total interest paid.

Do I still get a tax refund if I am on a payment plan?

No. The IRS will explore any refund you receive to the unpaid balance on your installment agreement. This is called offset, and it happens automatically. You cannot prevent it, but it does reduce what you owe.

Can I pay off the plan early without a penalty?

Yes. There is no penalty for paying off an installment agreement early. You can pay the full remaining balance at any time, and interest stops accruing once the debt is paid in full.

What happens if I move or change my address?

Notify the IRS when ready. You can update your address online through IRS.gov, by phone at 1-800-829-1040, or by mail. If the IRS cannot reach you at the address on file, they may terminate the agreement and begin collection action.

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.