You can set up a payment plan on IRS.gov without calling or visiting an office

The IRS lets you create a payment plan online through their website using the Online Payment Agreement tool. You log in with your IRS credentials, enter your tax debt and income information, choose how much you want to pay each month, and the system tells you whether the plan is accepted. The whole process takes 15 to 20 minutes if you have your tax return and financial information ready. You get a confirmation number when ready and can start making payments within days.

This route works best if you owe less than $50,000 in combined taxes, penalties, and interest, and you have a Social Security number or ITIN. If you owe more, you will need to use a different process or speak with the IRS directly. The online tool also does not work if you have unfiled tax returns or if the IRS has already filed a Notice of Federal Tax Lien against you—those situations require a phone call or in-person work.

Key Takeaways

  • The IRS Online Payment Agreement tool at IRS.gov lets you set up a plan without speaking to anyone, and you receive a confirmation number the same day.
  • You must have filed your tax return for the year you owe taxes, and you need your Social Security number, current income, and monthly expenses to complete the form.
  • Monthly payments can be as low as $25, but the IRS charges a setup fee (currently $31 to $225 depending on the payment method you choose) and interest continues to accrue on the unpaid balance.
  • The system accepts or rejects your plan when ready based on the debt amount and your income; rejection usually means the IRS thinks you can pay more per month or that you need to speak with a representative.
  • Once approved, you can change your payment amount, pause the plan temporarily, or pay it off early without penalty through your IRS account.

What you need before you start

Gather these documents and information before you open the Online Payment Agreement tool: your Social Security number or ITIN, your most recent tax return (the one for the year you owe), your current monthly income (from pay stubs, self-employment records, or benefits statements), and a list of your monthly expenses (rent, utilities, food, insurance, childcare, loan payments). The IRS uses this information to calculate how much you can reasonably pay each month.

You also need a way to verify your identity. The IRS accepts a username and password from your existing IRS online account, or you can create one using your Social Security number and other personal information. If you do not have an IRS account yet, you can set one up on IRS.gov before you start the payment plan tool—it takes about 10 minutes and requires a valid email address.

Have a payment method ready: a bank account for direct debit, a debit card, or a credit card. Direct debit from your bank account has the lowest setup fee ($31) and is the fastest way to start payments. Card payments cost more ($225 setup fee) and take longer to process.

Step-by-step: Creating your plan online

Log into your IRS account at IRS.gov or create one if you do not have one yet. Once you are logged in, look for the "Online Payment Agreement" tool under the "Payments" section. Click it and select "Short-Term Extension" if you think you can pay off the debt within 180 days, or "Long-Term Plan" if you need more time. The tool will ask you to confirm the amount you owe—this comes from your tax account, so verify it matches your records.

Next, enter your monthly income and expenses. The IRS calculates your "reasonable collection potential"—the amount they think you can pay each month based on what is left after your basic living costs. You will see a suggested monthly payment amount. You can accept it, offer to pay more, or propose a lower amount. If you propose less than the IRS suggests, the system may reject it and direct you to call instead.

Choose your payment method and frequency. You can pay monthly, bi-weekly, or weekly. Direct debit from your bank account is the default and cheapest option. Enter your bank routing number and account number, or your card details. Review the setup fee (which will be added to your first payment or charged separately depending on your method), the total interest you will pay over the life of the plan, and the estimated payoff date.

Submit the agreement. The system processes it when ready and tells you whether it is accepted. If accepted, you receive a confirmation number and an agreement document you can read and save. Your first payment is due on the date shown in the agreement—usually 30 days from approval. If rejected, the system explains why and gives you the phone number to call.

What happens after approval

Your payment plan is now active. The IRS sends you a notice in the mail within two weeks confirming the agreement, the monthly payment amount, and the due date. Keep this notice—it is your proof that you have a plan in place. Penalties stop accruing once you are in a payment plan, but interest continues to accrue on the unpaid balance at the current rate (which changes quarterly).

Payments are due on the same day each month. If you set up direct debit, the IRS withdraws the payment automatically. If you chose to pay by card or check, you are responsible for sending the payment on time. Missing a payment can end your plan and trigger collection action, so set a calendar reminder if you are not using automatic withdrawal.

You can view your plan details and payment history anytime by logging into your IRS account. The account shows your remaining balance, the next payment date, and how much interest has accrued. If your financial situation changes and you can pay more, you can increase your monthly payment through your account. If you hit a hardship and cannot pay for a month or two, you can request a temporary pause, though interest will continue to accrue.

When the online tool will not work

The Online Payment Agreement tool rejects applications in several situations. If you owe more than $50,000, you cannot use the online tool—you must call the IRS at 1-800-829-1040 or work with a tax professional. If you have not filed a tax return for the year you owe taxes, you must file it first; the IRS will not set up a plan on unfiled returns.

If the IRS has already filed a Notice of Federal Tax Lien against you (a public record that gives the government a claim on your assets), the online tool is locked and you must speak with a representative. The same applies if you are in an active wage garnishment or bank levy. If you are unsure whether a lien has been filed, you can search the IRS lien database on IRS.gov or call 1-800-829-1040 to ask.

The tool also will not work if you are behind on current-year tax payments. For example, if you owe 2022 taxes and your 2024 return is due but not yet filed, the IRS will not let you set up a plan until you file 2024. This is because the IRS wants to know your full tax picture before committing to a payment schedule.

Setup fees and the true cost of a payment plan

The IRS charges a setup fee to create a payment plan. The amount depends on your payment method: direct debit costs $31, card payments cost $225, and phone or in-person setup costs $225. This fee is added to your first payment or charged separately depending on the method you choose. It is a one-time charge, not a monthly fee.

Beyond the setup fee, you pay interest on the unpaid balance. The interest rate is the federal short-term rate plus 3 percent, and it changes quarterly. As of early 2024, the rate is around 8 percent per year, but check IRS.gov for the current rate. Interest accrues daily and is added to your balance each month, so the longer you take to pay, the more interest you owe.

Example: You owe $5,000 in taxes and penalties. You set up a plan to pay $150 per month using direct debit. The setup fee is $31, so your first payment is $181. At 8 percent annual interest, you will pay roughly $400 in interest over the life of the plan, bringing your total cost to about $5,400. If you could pay $300 per month instead, you would pay roughly $150 in interest and finish in 17 months instead of 33.

Changing or ending your plan

Once your plan is approved, you can modify it through your IRS account without calling. To increase your monthly payment, log in, find your agreement, and select "Modify Payment Amount." The change takes effect with your next payment. To decrease your payment, you can request a modification, but the IRS may reject it if they think you can pay more based on your income.

If you come into money—a bonus, inheritance, or tax refund—you can pay off the plan early without penalty. Any overpayment goes toward the remaining balance. If you receive a tax refund while in a payment plan, the IRS automatically applies it to your debt unless you request otherwise.

If you miss a payment, contact the IRS when ready. One missed payment does not automatically end the plan, but two or more missed payments in a row will. If your plan ends, the IRS resumes collection action and may file a lien or garnish your wages. You can request reinstatement by calling 1-800-829-1040, but it is easier to stay current from the start.

Frequently Asked Questions

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

Yes. The online tool combines all your tax debt into one plan. You must have filed returns for each year you owe, and the total debt (including penalties and interest) must be under $50,000. If you owe more than $50,000 across multiple years, you will need to call the IRS.

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

You can propose a lower amount when you set up the plan. The IRS may accept it if the payment covers at least the monthly interest accrual. If they reject your offer, you can call 1-800-829-1040 to discuss a hardship or request a temporary pause. A pause stops your payments for a few months but does not stop interest from accruing.

Will setting up a payment plan hurt my credit score?

The payment plan itself does not appear on your credit report. However, the underlying tax debt may already be reported to credit bureaus, and if you miss payments on the plan, that can be reported as well. Making your payments on time will not improve your credit, but it will prevent further damage.

How long does it take for my first payment to be processed?

If you use direct debit, your first payment is withdrawn on the date shown in your agreement, usually 30 days after approval. If you pay by card or check, the payment must arrive by the due date. Direct debit is the fastest and most reliable method.

Can I use the online tool if I am self-employed?

Yes, as long as you have filed a tax return for the year you owe. You will need to enter your net self-employment income (income minus business expenses) when the tool asks for your monthly income. Have your most recent tax return and business records available to verify the amount.