What kinds of payment plan are there?
| Short-term payment plan | Long-term installment agreement | |
|---|---|---|
| Time to pay | Up to 180 days | Monthly payments over a longer period |
| Setup fee | None | Yes, depending on how you apply and pay; lowest for online applications with direct debit, and reduced or waived for low-income taxpayers |
| Apply online | Individuals, within the online limit | Individuals owing $50,000 or less; businesses within their online limit |
| Other ways to apply | Phone | Phone, or Form 9465 by mail |
How do you set one up?
File every required return
The IRS will not agree a plan while returns are missing. See filing back taxes.
Find the balance
From your notice or IRS online account.
Choose a monthly amount you can keep up
Missing payments is the main reason plans end.
Apply online
Through the IRS online payment agreement tool, or by phone or Form 9465.
Pay by direct debit
It is the cheapest option and reduces the risk of a missed payment.
Balances and payments can be checked in the IRS business tax account.
What does a plan cost?
Interest continues on the unpaid balance at the federal short-term rate plus 3 percentage points, compounded daily. The late payment penalty continues too, but at 0.25% a month instead of 0.5% while an installment agreement is in force, for individuals who filed on time. Paying more than the minimum when you can reduces both.
What keeps a plan in force?
- Making every payment on time.
- Filing all future returns and paying all future taxes on time, including estimated tax and payroll deposits.
- Any refunds due to you are generally applied to the balance.
If circumstances change, contact the IRS to revise the plan before missing a payment.
What if you cannot afford any plan?
The IRS may agree to an offer in compromise, settling for less than the full amount, or treat the account as currently not collectible for a time, if you show you cannot pay. Both require detailed financial information. See late filing and late payment penalties.
See offer in compromise. A plan agreed before a levy notice generally stops levy action; see CP504 notice.
Can the penalties be removed as well?
Often. First-time abatement can remove failure-to-file and failure-to-pay penalties for one period once you are compliant. See first-time penalty abatement.
Owe more than you can pay now?
We work out an affordable plan, apply for it, and request penalty relief where you qualify.
Questions people ask
How do I set up an IRS payment plan?
File all required returns, then apply online through the IRS online payment agreement tool, by phone, or with Form 9465.
How long can an IRS short-term payment plan last?
Up to 180 days, with no setup fee.
Do penalties and interest continue on a payment plan?
Interest continues. The late payment penalty drops to 0.25% a month while an installment agreement is in force.
What happens if I miss a payment on my plan?
The plan can default. Contact the IRS before missing a payment to revise it.
Sources
Every fee, date and rule on this page was taken from these official and primary sources.
- IRS: Online payment agreement
- IRS: Form 9465, Installment Agreement Request
- IRS: Penalties
- Internal Revenue Code section 6159: installment agreements
Rules and fees change. If you are reading this long after September 30, 2026, confirm the figures with the source before you rely on them.
Related guides
More in Deadlines, penalties and IRS notices
This guide is general information. It is not tax or legal advice for your situation.