How to Apply for an IRS Payment Plan: Step-by-Step Guide
If you owe taxes but can’t pay in full, the IRS allows taxpayers to set up a payment plan (installment agreement) to pay over time. Here’s how to apply and what to expect.
Step 1: Determine Which Payment Plan You Need
The IRS offers two main types of payment plans:
1. Short-Term Payment Plan (Up to 180 Days)
✅ No setup fee.
✅ Must pay the full balance within 6 months.
✅ Payments via IRS Direct Pay, debit/credit card, or check.
2. Long-Term Payment Plan (More Than 180 Days)
✅ Monthly installment agreement required.
✅ Setup fees apply unless you qualify for a low-income waiver.
✅ Payments made via direct debit (recommended) or manual payments.
✅ Interest and penalties continue to accrue.
🔗 Learn more: IRS Payment Plans Guide
Step 2: Check If You Qualify
To be eligible for a payment plan, you must:
- Have filed all required tax returns.
- Owe $50,000 or less (individuals) or $25,000 or less (businesses) in taxes, interest, and penalties.
- Agree to make monthly payments on time.
🔗 Learn about IRS Payment Plan Eligibility
Step 3: Apply for a Payment Plan
Online (Fastest Method)
- Visit the IRS Online Payment Agreement page.
- Log in or create an IRS account.
- Select the payment plan that fits your situation.
- Choose direct debit to avoid potential default.
By Phone or Mail
- Call the IRS at 1-800-829-1040 to request a payment plan.
- Complete Form 9465 (Installment Agreement Request) and mail it to the IRS.
Step 4: Understand Payment Plan Fees
| Payment Method | Setup Fee | Interest & Penalties |
|---|---|---|
| Direct Debit (Auto Withdrawal) | $31 (waived for low-income) | Continues until paid |
| Manual Payments | $130 | Continues until paid |
| Short-Term Plan (Under 180 Days) | No fee | Continues until paid |
🔗 Read more: IRS Payment Plan Fees & Interest
Step 5: What Happens If You Miss a Payment?
🚨 If you miss a payment:
- The IRS may cancel your plan.
- You could face liens, levies, or wage garnishments.
- Interest and penalties continue to accrue.
To avoid default: ✅ Ensure sufficient funds for automatic payments.
✅ Contact the IRS immediately if you can’t make a payment.
🔗 Learn about IRS Penalties & Interest
Final Thoughts
Setting up an IRS payment plan is a simple way to pay your tax debt over time. Apply early, choose direct debit, and stay on top of your payments to avoid penalties or collections.
🚀 Next Steps:
- Apply online now if you qualify.
- Review your IRS balance & eligibility.
- Explore tax debt settlement options if you can’t afford payments.
🔗 Need alternative tax relief? Read our Offer in Compromise Guide.