How IRS payment plans actually work
A payment plan is the most common way people resolve a tax balance. Here's which plan fits your situation, what it costs, and how to make sure it doesn't fall apart.
The short version
- If you can pay within 180 days, a short-term plan has no setup fee.
- If you owe $50,000 or less, you can usually get a long-term plan online without sharing your full finances.
- Owe more? You can still get a plan, but the IRS will look at your income, expenses and assets.
- Interest keeps running, but the late-payment penalty is cut in half while you're on a plan.
1The types of IRS payment plans
| Plan | Best if | How long |
|---|---|---|
| Short-term plan | You can pay in full soon | Up to 180 days |
| Guaranteed installment agreement | You owe $10,000 or less and have a clean recent history | Up to 3 years |
| Streamlined installment agreement | You owe $50,000 or less | Up to 72 months |
| Non-streamlined installment agreement | You owe more than $50,000 | Based on what you can afford |
| Partial-pay installment agreement | You can't afford to pay it all before the IRS's collection deadline | Until the collection period ends |
2Who qualifies
To get any long-term plan, you generally need to:
- Have filed all required tax returns.
- Be current on this year's tax payments, like withholding or estimated payments.
- Agree to pay your future taxes on time.
For balances of $50,000 or less, the IRS usually approves a plan without asking for a financial statement, as long as the monthly payment pays off the balance in time. For larger balances, you'll need to show your income, expenses and assets, often on Form 433-F or 433-A, and the IRS will set the payment based on what it thinks you can afford.
3What it costs
- Setup fee. Short-term plans have none. Long-term plans have a one-time fee that's lowest when you apply online and pay by automatic direct debit. Low-income taxpayers can have the fee reduced or waived.
- Interest. Interest keeps adding up on the unpaid balance until it's paid in full.
- Penalty. The failure-to-pay penalty drops from 0.5% to 0.25% per month while you're on a plan, as long as you filed your return on time.
Because interest continues, paying more than the minimum, or paying off the plan early, saves you money. There's no penalty for paying early.
4How to apply
- Online. If you owe $50,000 or less, the IRS Online Payment Agreement tool at irs.gov is usually the fastest way, and you'll know right away if you're approved.
- By form. Form 9465 requests an installment agreement by mail. Larger balances may also need a financial statement.
- Through a professional. A tax professional with your authorization can request a plan for you, negotiate the payment amount, and handle the paperwork for larger balances.
5How to keep your plan from defaulting
The IRS can end your plan if you:
- Miss a monthly payment.
- Don't file a future tax return on time.
- Owe new taxes you can't pay.
If a plan defaults, collection can start again. If you know you'll miss a payment, contact the IRS before the due date. Automatic direct debit is the easiest way to never miss one.
Common questions
Will the IRS file a lien if I'm on a payment plan?
For balances of $50,000 or less on a direct-debit plan, the IRS generally doesn't file a new lien. For larger balances, a lien is more likely. A lien already filed stays in place until the balance is paid.
Can I change my monthly payment later?
Yes. If your situation changes, you can ask to lower or raise the payment. Lowering it may require updated financial information.
Will I still get my tax refund?
Usually not. While you owe, the IRS will apply any future refunds to your balance.
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Written by Jonathan Samuel, EA, an Enrolled Agent licensed to represent taxpayers before the IRS. This page is general information, not advice for your specific situation. IRS thresholds and fees change; check irs.gov for current amounts.