The IRS will let you pay your tax debt over time instead of in one lump sum, but you have to request it yourself — they won't offer it automatically.

When you owe the IRS money, you have three main ways to pay: in full, through a short-term extension (120 days or fewer), or through a formal payment plan. A payment plan is a written agreement between you and the IRS that lets you make monthly payments toward what you owe. The IRS charges a setup fee and interest on the unpaid balance, but the plan stops the IRS from taking collection action like wage garnishment or bank levy while you're making payments on time.

You can request a payment plan online, by phone, or by mail. The online route is fastest — you'll get a decision within minutes in most cases. If you owe less than $50,000 in combined taxes, penalties, and interest, you can set up a plan yourself without talking to anyone. If you owe more, or if you've had payment plan trouble before, you'll need to work with an IRS representative.

Key Takeaways

  • The IRS Online Payment Agreement tool at IRS.gov lets you set up a plan in minutes if you owe under $50,000 and can pay within 72 months.
  • Setup fees range from $31 to $225 depending on how you pay and how much you owe; fees are lower if you set up automatic payments from your bank account.
  • You must have filed all required tax returns and made any required estimated payments before the IRS will approve a plan.
  • Interest and penalties keep accruing on your unpaid balance, so a payment plan stops collection action but doesn't stop the debt from growing.
  • If you miss a payment or fall behind, the IRS can cancel the plan and resume collection efforts, including wage garnishment.

Setting up a plan online through the IRS website

The fastest way to request a payment plan is through the IRS Online Payment Agreement tool at IRS.gov/payments. You'll need your Social Security number or Individual Taxpayer Identification Number, your filing status, and the tax year(s) you owe for. The tool will show you how much you owe, calculate what your monthly payment would be, and let you choose your payment date each month.

The online tool works only if you owe $50,000 or less in total tax, penalties, and interest combined. You also can't use it if you've had a payment plan in the last 120 days that the IRS terminated, or if you're currently in a plan with the IRS. Once you submit your request, you'll get a confirmation number when ready and an agreement number within a few minutes. The IRS will send you a paper copy by mail within two weeks.

You can choose to pay monthly, biweekly, or semimonthly. The IRS prefers automatic bank withdrawals — the setup fee is lower if you agree to let them pull money directly from your account on the date you choose each month. If you want to pay by check or money order instead, the fee is higher.

Calling the IRS to set up a plan by phone

If you owe more than $50,000, or if you want to talk through your options with someone before committing, you can call the IRS at 1-800-829-1040. Have your tax return, a calculator, and information about your monthly income and expenses ready. The representative will verify your identity, review what you owe, and discuss payment amounts you can afford.

Phone lines are busiest in the morning and early in the tax season (January through April). Wait times can be an hour or more. If you call, the IRS will mail you a formal agreement to sign and return. You don't make your first payment until after they receive the signed agreement back.

The IRS also has a dedicated line for people with payment plans who need to modify them: 1-800-829-1040. If you're already in a plan and need to change your payment amount or due date, you can call this number or use the Online Payment Agreement tool to request a modification.

Mailing in a payment plan request

You can also request a payment plan by mail using Form 9465, Installment Agreement Request. You'll fill out the form with your name, address, Social Security number, the tax year(s) you owe for, and how much you want to pay each month. Attach a copy of your most recent tax return and mail it to the IRS address for your state, which is listed on the form itself.

Processing a mailed request takes 30 to 60 days. The IRS will send you a letter confirming whether your plan was approved and what your payment terms are. Don't make any payments until you receive this letter — if you send money before the plan is approved, the IRS may explore it to your account but won't consider you in a formal agreement yet.

Mail a request only if you can't use the online tool and prefer not to call. The online and phone routes are much faster.

What the IRS needs from you before approving a plan

Before the IRS will approve any payment plan, you must have filed all tax returns you're required to file, even if you can't pay what you owe. If you're self-employed or have other income that requires estimated quarterly tax payments, you must be current on those as well. If you're behind on filing, the IRS will tell you to file first, then resubmit your payment plan request.

You also need a valid mailing address on file with the IRS. If you've moved recently, update your address with the IRS before requesting a plan — mail sent to an old address can cause the IRS to think you've abandoned the plan.

The IRS doesn't require you to prove your income or expenses when you set up a plan online for amounts under $50,000. If you call or mail in a request for a larger amount, the IRS representative or the letter they send may ask for recent pay stubs, bank statements, or a list of your monthly expenses to make sure the payment amount you're proposing is realistic.

Setup fees and how much your monthly payment will be

The IRS charges a setup fee when you create a payment plan. The fee depends on how much you owe and how you choose to pay. If you set up automatic bank withdrawals, the fee is $31 for plans under $25,000 and $225 for plans of $25,000 or more. If you pay by check, money order, or credit card, the fee is higher: $225 for any amount.

Your monthly payment amount depends on how much you owe and how long you want to take to pay it. The IRS will calculate a suggested payment based on what you owe divided by the number of months you choose. You can propose a lower payment if you can't afford the suggested amount, but the IRS will only approve it if you can pay off the entire debt within 72 months (six years). If your proposed payment is too low to meet that important date, the IRS will counter with a higher amount or deny the plan.

Interest and penalties keep accruing on your unpaid balance while you're in a payment plan. The current interest rate is set by the IRS quarterly and is usually around 8 percent per year, though it varies. This means your monthly payment covers some of the interest and some of the principal, but the total amount you owe grows slightly each month until you've paid it all off.

What happens after your plan is approved

Once your plan is approved, the IRS stops collection action like wage garnishment, bank levies, or liens — as long as you make your payments on time. You'll receive a formal agreement letter in the mail that shows your payment amount, due date, and the total you owe. Keep this letter; you'll need it if you ever need to modify the plan or if you have questions about your account.

Make your first payment on the date shown in your agreement letter. If you set up automatic withdrawals, the IRS will pull the money from your bank account on that date each month. If you're paying by check or money order, mail it to the address shown in your agreement letter, and mail it early enough that it arrives by the due date.

If you miss a payment or pay late, the IRS will send you a notice. If you miss a payment by more than a few days, the IRS can terminate your plan and resume collection action. If you know you can't make a payment, call the IRS at 1-800-829-1040 before the due date and ask about your options — sometimes they'll give you a short extension or let you skip one payment.

Modifying or canceling your plan

If your situation changes and you need to lower your monthly payment, you can request a modification. Use the Online Payment Agreement tool at IRS.gov/payments, call 1-800-829-1040, or mail Form 9465 again with your new proposed payment. The IRS will review your request and either approve it or send you a counter-offer.

If you come into money and want to pay off the plan early, you can do that without penalty. Send a check or money order for the full remaining balance to the address on your agreement letter, and include a note with your name, Social Security number, and tax year. The IRS will close the plan and send you a confirmation letter.

If you want to cancel the plan, you can stop making payments, but the IRS will resume collection action. It's usually better to call and ask about modifying the plan to a lower payment than to straightforward stop paying.

Frequently Asked Questions

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

Yes. The IRS will combine all the years you owe into one plan. The total amount owed across all years must be under $50,000 to use the online tool. If you owe more, you'll need to call or mail in a request.

What if I can't afford the payment amount the IRS suggests?

You can propose a lower payment when you set up the plan. The IRS will approve it only if you can pay off the entire debt within 72 months. If your proposed payment is too low, they'll either counter with a higher amount or deny the plan. Call 1-800-829-1040 to discuss what you can realistically afford.

Do I have to pay the setup fee upfront, or can it be added to my plan?

The setup fee is usually added to your first payment or rolled into the total amount you owe. You don't pay it separately. The fee is lower if you choose automatic bank withdrawals instead of paying by check.

What happens if I miss a payment on my plan?

The IRS will send you a notice. If you miss a payment by more than a few days, they can cancel the plan and resume collection action like wage garnishment. Call 1-800-829-1040 when ready if you know you'll miss a payment — they may grant a short extension.

Can I pay off my plan early without a penalty?

Yes. You can send the full remaining balance at any time, and the IRS will close the plan with no early-payoff penalty. Include your name, Social Security number, and tax year with your payment so they explore it correctly.