Yes, you can set up a payment plan with the IRS, and most people who ask are approved

The IRS offers payment plans (called installment agreements) that let you pay your tax debt over time instead of in one lump sum. You do not need to prove hardship to get one. The IRS approves most requests, and the process takes days to weeks, not months.

There are two main types: a short-term plan if you can pay within 180 days, and a long-term plan if you need more time. Both have setup fees and interest charges on top of what you owe, but they stop the IRS from taking collection action while you are making payments.

You can request a plan online, by phone, or by mail. Online is fastest—you get approval the same day in most cases. The IRS will tell you upfront what your monthly payment would be and what the total cost will be with interest and fees.

Key Takeaways

  • Short-term plans (120 to 180 days) have lower fees and no monthly payment requirement; long-term plans let you spread payments over years but cost more in interest.
  • You can set up a plan online through IRS.gov, by calling the IRS at 1-800-829-1040, or by mailing Form 9465 to the address on your tax notice.
  • Setup fees range from $31 to $225 depending on the plan type and how you set it up; interest accrues daily on the unpaid balance.
  • Once approved, you make monthly payments directly to the IRS, and the agency stops collection calls and wage garnishment actions.
  • If you miss a payment or fall behind, the IRS can cancel the plan and resume collection, so setting a payment you can actually afford is critical.

Short-term plans: 120 to 180 days to pay

A short-term plan is the cheapest option if you can pay your full debt within 120 to 180 days. The setup fee is $31, and you do not have to make monthly payments on a set schedule—you can pay whenever you want as long as the full amount is in by the important date.

This plan makes sense if you are expecting a bonus, a tax refund next year, or a lump sum from a sale or settlement. You avoid the interest that builds up over a longer payment period, and the IRS does not report the plan to credit bureaus.

You can set up a short-term plan online at IRS.gov without calling or mailing anything. The process takes minutes, and you get approval the same day.

Long-term plans: spreading payments over months or years

If you cannot pay within 180 days, a long-term plan lets you pay in monthly installments over a longer period. The IRS will work with you on the amount—you can propose a monthly payment you can afford, and the IRS will tell you how many months it will take to pay off the debt at that rate.

Setup fees for long-term plans range from $31 to $225 depending on how you set it up. If you set it up online or by phone, the fee is lower ($31 to $225). If you mail in Form 9465, the fee is $225. Interest accrues daily on the unpaid balance, so the longer the plan, the more interest you pay overall.

Long-term plans are reported to credit bureaus, which can affect your credit score. However, making on-time payments helps rebuild credit over time, and the plan stops the IRS from taking more aggressive collection steps like wage garnishment or bank levies.

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

The fastest way is online through the IRS Online Payment Agreement tool at IRS.gov. You log in with your Social Security number or ITIN, enter the amount you owe, and propose a monthly payment. The IRS approves or counters with a different amount the same day. You then set up automatic payments from your bank account.

If you prefer to call, phone the IRS at 1-800-829-1040. Have your Social Security number, the tax year you owe for, and the amount ready. A representative will walk you through the options and set up the plan over the phone. This takes 20 to 30 minutes.

You can also mail Form 9465 (Installment Agreement Request) with a copy of your tax notice to the address shown on the notice. Mail takes 30 to 60 days to process. Include a cover letter with your phone number so the IRS can contact you if they need more information.

What happens if you miss a payment or cannot afford the monthly amount

If you miss a payment, the IRS will send you a notice. You have 30 days to catch up before the IRS cancels the plan. Once cancelled, the full debt becomes due when ready, and the IRS can resume collection actions like wage garnishment, bank levies, or liens on your property.

If your financial situation changes and you cannot afford the monthly payment, contact the IRS before you miss a payment. You can request a modification to lower the payment amount or extend the timeline. The IRS will not automatically lower your payment—you have to ask.

If you are in severe hardship (unable to pay basic living expenses), you may be able to request Currently Not Collectible status, which pauses collection temporarily. Interest still accrues, but the IRS stops collection action. This is not a forgiveness—you still owe the debt, and collection can resume later.

Setup fees, interest, and the total cost of a payment plan

The setup fee is separate from what you owe. For a long-term plan set up online or by phone, the fee is $31 to $225 depending on your income level and payment method. If you set up automatic bank payments, the fee is lower. If you mail in Form 9465, the fee is $225.

Interest accrues daily on the unpaid balance at the current IRS interest rate, which changes quarterly. As of early 2024, the rate is 8% per year, but this varies. The IRS publishes the current rate on IRS.gov. On a $10,000 debt paid over two years, interest could add $800 to $1,200 depending on the rate and how quickly you pay.

When you request a plan online or by phone, the IRS will show you the total cost—principal plus interest plus fees—before you agree. This lets you see the full picture and decide whether a longer plan or a shorter one makes more sense for your situation.

State tax payment plans and other agencies

Most states offer their own payment plans for state income tax debt. The process is similar to the federal plan: you contact your state tax agency, propose a monthly payment, and set up automatic payments. Fees and interest rates vary by state.

If you owe both federal and state taxes, you will need separate plans with each agency. The IRS cannot collect state taxes, and your state cannot collect federal taxes. Contact your state tax agency directly to set up a state plan.

Local property tax agencies, county tax assessors, and other creditors may also offer payment plans, but they are not required to. If you owe back property taxes or other local taxes, call the tax assessor's office in your county to ask whether a plan is available.

Frequently Asked Questions

What if I cannot afford any monthly payment right now?

Contact the IRS and ask about Currently Not Collectible status. This pauses collection temporarily while you get back on your feet. Interest still accrues, but the IRS stops calling and taking collection action. You can request this status by calling 1-800-829-1040 or by mailing Form 433-F (Collection Information Statement for Wage Earners and Self-Employed Individuals).

Can I pay off the plan early without a penalty?

Yes. You can pay off the full balance at any time without penalty. Paying early saves you interest, since interest stops accruing once the debt is paid in full. There is no prepayment fee or early payoff charge.

Will a payment plan hurt my credit score?

Long-term plans are reported to credit bureaus and may lower your score initially. However, making on-time payments rebuilds credit over time. Short-term plans are not reported to bureaus. Either way, owing back taxes already affects your credit; a payment plan stops further damage from collection action.

What if the IRS rejected my payment plan request?

The IRS rarely rejects a request outright, but they may propose a higher monthly payment than you offered. If you disagree with their amount, you can appeal or request a modification. Call 1-800-829-1040 to discuss. If you still cannot reach an agreement, you can request a hearing with the IRS Office of Appeals.

Do I need a lawyer to set up a payment plan?

No. You can set up a plan yourself online, by phone, or by mail at no cost. A tax professional or attorney can help if you have complex tax issues or if the IRS has already taken collection action, but for a straightforward payment plan, you do not need one.