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How To Set up an IRS Payment Plan With Installment Agreements

An agreement you reach directly with the IRS to pay your federal tax due for a specific period of time is known as an IRS payment plan. An Installment Agreement is an IRS program in the United States that allows individuals to pay tax debt in monthly payments. They can be guaranteed, streamlined, partial payment, or non-streamlined.

An agreement you reach directly with the IRS to pay your federal tax due for a specific period of time is known as an IRS payment plan. The IRS provides alternatives for both short-term and long-term payment plans.

The agreement that makes the most sense for you will depend on how much you owe and how quickly you believe you can pay it off. The organization typically won't impose a tax levy or a tax lien as long as you're adhering to your plan.

Note: You still incur interest and penalties for late payments even if you enroll in an IRS payment plan, which continue to accumulate until your balance is zero.

Advantages of Paying Taxes on Time

The law authorizes the IRS to impose fines on taxpayers for both failing to submit a tax return and failing to make timely payments of taxes due. You will be charged interest and a monthly late payment penalty if you are unable to pay your tax bill by the original filing deadline.

Even if you are unable to pay your entire bill, you should still file your tax return on time to avoid penalty. It's always in your best interest to pay in full as soon as you can so that you don’t have to pay any additional fees.


  • No accumulation of interest and fines
  • No offsetting of your future refunds
  • No difficulty in getting loans

Visit to learn more about online payment choices if you're unable to pay the full amount due.

Who Is Eligible for an IRS Payment Plan?

If you meet the requirements mentioned below, you can use the IRS Online Payment Agreement tool to submit an application for a short- or long-term plan:

  • Short-term payment plan: You can finish paying off your tax obligation within either 90 days, or 180 days, if you owe less than $100,000 in total tax, penalties, and interest and have filed all your tax forms.
  • Long-term payment plan: If you have filed all your tax forms and owe $50,000 or less in total tax, penalties, and interest, you may require more than 180 days to pay your tax bill.

If the tool finds that you are ineligible, the IRS advises that you may still be able to submit Form 9465 or apply by phoning the IRS main hotline.

Federal Income Tax Installment Agreements

When a borrower enters into an installment arrangement with the IRS to pay back past-due (link: text: federal income taxes), the lender may (rather than requiring payment in full) include the monthly payment amount as part of the borrower's monthly debt obligations if:

  1. There is no evidence that the borrower has had a Notice of Federal Tax Lien issued against them in the county where the relevant property is situated.
  2. The following documents are acquired by the lender:
    • An IRS-approved installment agreement with terms of repayment that include the total amount owed as well as the monthly payment amount; and
    • Proof that the borrower is up to date on all payments related to the tax installment plan. The most recent IRS payment notice that shows the amount and date of the previous payment as well as the amount and date of the upcoming payment is considered acceptable proof. At least one payment must have been made prior to closing. As a reminder, lenders remain responsible under the life-of-loan representations and warranties for clear title and first-lien enforceability in accordance with A2-2-07, Life-of-Loan Representations and Warranties.

If a federal income tax installment agreement satisfies the requirements in Debts Paid by Others or Installment Debt, the payments on the agreement may be deducted from the borrower's DTI ratio as outlined in B3-6-05, Monthly Debt Obligations. If any of the aforementioned requirements is not satisfied, the borrower must comply with_ B3-6-07, Debts Paid Off At or Prior to Closing_, and pay the remaining total owed under the payment arrangement with the IRS.

Your Online Account

Have your photo identification prepared if you don't already have an or IRS username. The sign-in page has more information regarding identity verification.

Access tax records

  • Access transcripts and view significant information from your most recent tax return, such as your adjusted gross income.
  • View details regarding your economic impact payments.
  • View details regarding your prepaid Child Tax Credit installments.
  • View digital versions of certain IRS notices.

Make and view payments

  • Pay with a debit or credit card or from your bank account. Without logging in, you can still make a guest payment.
  • View your estimated tax payments from the past five years in the payment history.
  • View any outstanding or upcoming payments.

View or create payment plans

  • Apply for a new payment plan and become familiar with available payment alternates.
  • View the details of your payment plan if you have one.

View your balance

  • Check your balance and a breakdown by tax year.

Manage communication preferences

  • Use electronic notices instead of paper.
  • Receive email alerts of any new activity or account information.

View tax pro authorizations

  • View all requests for permission made by tax experts.
  • Accept and digitally sign the power of attorney and the authorization for the use of your tax information.

What Happens When I Request a Payment Plan?

With some exceptions, the IRS is normally banned from levying penalties when you request a payment plan (installment agreement). The IRS's time to collect is either stopped or extended while an Installment Agreement (IA) is in progress. Until an IA is examined or established, or the request is withdrawn or denied, an IA request is in the pending stage.

In the event that the planned IA is rejected, the collecting period is postponed for 30 days. Similarly, if you fall behind on your IA payments and the IRS chooses to terminate the IA, the running of the collection period is stopped for 30 days.

Additionally, if you use your right to appeal an IA denial or termination, the collection period is stopped from the time it is pending until the day the appealed decision becomes final. 

IRS Payment Plan Agreements

An arrangement with the IRS to pay the taxes you owe over a longer period of time is known as a payment plan. If you are confident that you can pay your taxes in full within the extra time, you should ask for a payment plan.

Notice of Federal Tax Lien and/or an IRS levy action may be filed if you don't pay your taxes on time. Refer to Publication 594, The IRS Collection Process.

If you are unable to pay your taxes, the IRS may be able to set you up on an installment plan.

  1. With an installment plan, you can pay your taxes over time without worrying about levies, garnishments, or other forms of collection action.
  2. Although it can make payments more manageable, you would still owe penalties and interest for paying your taxes after the deadline.
  3. Depending on how much you owe, your plan's minimum monthly payment may vary.

Minimum monthly payment

Applying for an installment arrangement is possible online, over the phone, or through other IRS forms.

Here’s how a minimum monthly installment can be determined:

  1. Decision of the payable amount will be at the discretion of the taxpayer. You will be asked by the IRS how much you can afford to pay each month, and they will advise you to pay as much as you can to lower your interest and penalties.
  2. Your minimum payment will normally be equal to the total amount you owe divided by 72 if you choose not to respond, choose a payment amount that is too low, or allow the IRS to choose your payment amount.

Fees for IRS installment plans

Setting up an installment plan won't cost you anything if you can settle your debt within 180 days.

  1. If you need to set up a direct debit payment plan because you can't pay off your balance in 180 days, you can do so online for $31 or by phone, mail, or in person for $107 using Form 9465.
  2. Setting up the plan online will cost $130 if direct debit is not used.
  3. If direct debit is not used, setting up the plan over the phone, in the mail, or in person will cost $225 and require Form 9465.

Balance of $10,000 or less

Your installment plan will typically be immediately accepted as a "guaranteed" installment agreement if the amount you owe the IRS is less than $10,000.

  1. There is no set minimum payment necessary under this sort of plan as long as you agree to pay off your balance within three years.
  2. You might need to supply more information in order to qualify for a balance over $10,000.

Balance between $10,000 and $50,000

If your outstanding total is over $10,000, you may be eligible for a simplified installment plan.

  1. Although acceptance isn't certain, the IRS often doesn't need more financial details to approve these schemes.
  2. You have 72 months to pay with a simplified plan.
  3. Your balance owed divided by the maximum 72-month period is the minimum payment.
  4. Unless you are entitled to an exception, you must submit Form 433-F if you are unable to pay a sum equal to what you owe divided by 72.

Balance over $50,000

You need to provide more information to be eligible for a plan with a larger balance due.

  1. Your income and expenses on Form 9465-FS and Form 433-A should be reported to the IRS.
  2. You must include comprehensive information about your investments, assets, income, and bank accounts on Form 433-A.
  3. You might need to sell some of your valuable possessions, if you have any, in order to reduce your remaining balance.
  4. The exact arrangement you reach with the IRS will determine the minimum payment you must make in this case.

Interest rate on IRS payment plans

Whether or not you have an installment plan and whether or not you file on time affect your interest rate on outstanding taxes.

Interest rate in the absence of a payment plan when you do not file right away

You will get a letter from the IRS, and the interest due will be added to the balance owed if you fail to file a tax return or pay the amount due by the deadline.

This has a daily interest rate that is compounded at a rate equal to the federal short-term rate plus three percentage points, or around 5% at the moment. The IRS will also impose fines for late submissions.

Interest rate when you file on time without an installment agreement

You will be required to pay a failure-to-pay penalty if your return is timely filed but the associated tax bill is not. The failure-to-pay penalty is at a rate of 0.5% of the tax you owe per month until you pay the tax in full. You can be charged up to a maximum penalty of 25% of the tax due.

Rate of interest using an installment agreement

The failure-to-pay penalty is halved if you have an installment agreement. The IRS installment agreement's interest rate falls to 0.25%. Until the entire sum of the unpaid taxes is paid, interest and penalties for late payments continue to accumulate.

Applying for an IRS Payment Plan Online

You can access the IRS Online Payment Agreement system using the same user ID and password you used to sign up for an online IRS account to obtain a tax transcript or an identity protection PIN. If not, you'll need to create an account to verify your identity, for which you need the following:

  1. Access to a working email account
  2. Photo IDs, including your passport, state ID, and driver's license
  3. Your Social Security or individual tax identification number
  4. A smartphone or webcam to verify your identity
  5. A working phone number or email ID for multi-factor authentication

Visit the help page for further information if you need assistance with information verification or accessibility support.

Depending on the plan you select, the mode of application, and your eligibility for a charge reduction, the price of an IRS payment plan varies.

Browser Requirements of the Online Payment Agreement Tool

The following browsers _currently in use _support OPA:

  • Google Chrome
  • Internet Explorer or Microsoft Edge
  • Mozilla Firefox
  • Safari

Your browser needs to be set up to accept session cookies in order for you to use this application. Before using the back button to access the application, please make sure that your browser supports session cookies.

This program uses session cookies, which are distinct from persistent cookies. Session cookies are erased as soon as the web browser is closed and only remain momentarily in the browser memory.

This kind of cookie is necessary for the applications running to operate properly. The session cookies used on this website are not used to link site visitors to specific individuals. Please review the IRS Privacy Policy if you have any concerns regarding your privacy while using the IRS website.

Fees for an IRS payment plan

If you consent to the IRS making automatic withdrawals from your bank account to make the payments and you are a low-income taxpayer, the IRS will forgo the user charge. If you are a low-income taxpayer who meets all other requirements but is unable to use an electronic debit payment method, the IRS will reimburse you for the user fee when you settle your account.

In general, your adjusted gross income must be at or below 250% of the federal poverty threshold for you to qualify as a low-income candidate. (Check IRS Form 13844 to see whether you qualify).

Payment Plan TypeMaximum You Can Owe To QualifySetup Fee & Payment Methods

Short-term payment plan

(180 days or less)

$100,000 in combined tax, penalties, and interest

The cost to apply via phone, mail, internet, or in person is zero. Pay balance by:

  • Withdrawals (Direct Pay) from your savings or checking account,
  • Use the IRS's Electronic Federal Tax Payment System to e-pay by phone or online, or
  • Money order, debit or credit card or cheque.

Long-term payment plan 

(more than 180 days)

$50,000 in combined tax, penalties, and interest

If you pay through automatic debit withdrawals:

  • Pay a $31 setup fee to apply online.
  • To apply by phone, mail, or in person, there is a setup charge of $107.
  • Low-income taxpayers may not have to pay the setup charge.

If you use a different payment method (such as Direct Pay, EFTPS, or a money order):

  • Online application setup costs $130.
  • Pay a $225 setup charge for phone, postal, or in-person applications.
  • Low-income taxpayers will pay a $43 startup charge; this can later be repaid.

How Do I Review an Existing Plan?

By logging in to the Online Payment Agreement tool using the Apply/Revise button below, you can view specifics of your current payment plan (kind of agreement, due dates, and amount you need to pay).

What does the Online Payment Agreement tool allow you to do?

  1. Change the size of your monthly payment
  2. Change your monthly payment due date
  3. Convert a current contract to a direct debit contract
  4. Alter the bank routing and account numbers on a direct debit agreement
  5. Restore following a default
  6. Access the Online Payment Agreement tool using the Apply/Revise button below

How To Revise an Online Payment Plan

Log in to the Online Payment Agreement tool using the Apply/Revise.You can change your current plan type, payment date, and sum on the first page, and then send in your revisions.

You will be requested to change the payment amount if your new monthly payment does not satisfy the requirements. You will be given instructions for completing a payment plan if you are unable to make the minimum needed payment amount. Refer to Collection Information Statement or Form 433-B and how to submit it.

Enter your bank routing and account numbers to convert your current contract to a direct debit agreement or to modify the bank account linked to your current direct debit contract.

You may have to pay a reinstatement charge if you're having your plan that has lapsed by default reactivated.

How To Suspend IRS Installment Agreements

The IRS People First Initiative announced on March 25, 2020 that taxpayers have the opportunity to postpone installment agreement payments due between April 1 and July 15, 2020.

Taxpayers may choose to suspend payments at this time if they are currently unable to abide by the provisions of an Installment Payment Agreement, including a Direct Debit Installment Agreement.

Additionally, during this time, the IRS won't default on any Installment Agreements. According to the law, interest will keep building up on any outstanding debts.

However, many IRS locations are shut down or only partially staffed. So, how can you halt payments without contacting the IRS?

If you need to suspend these types of installment payments, due to financial reasons, you need to take the actions listed below:

  • **Direct Debit Installment Agreements (DDIAs) (where payments are automatically taken from a designated bank account): **Contact your bank directly, share the IRS People First Initiative information, and ask them to temporarily stop deductions. Banks must abide by consumer requests to halt recurring payments in a certain amount of time.
  • **Payments made under a payroll deduction installment agreement (PDIA) are deducted from your check as follows: **Inform your employer about the IRS People First Initiative and request that they refrain from withholding or sending payments to the IRS from your paycheck until July 15.

Re-Initiate Payments Before July 15

Please be aware that if payments are halted, taxpayers must start making payments again as of the expiration of the suspension term on July 15, 2020, to prevent a potential default under the agreement.

Taxpayers who have DDIAs or PDIAs must notify their bank or employer, as appropriate, so that the debits can be resumed at least two weeks before their next payment is due.

Key Takeaways

Some people prefer to file their tax returns late only to discover they have an unexpected tax bill, which can be overwhelming.

Fortunately, the IRS offers a few tax payment options that can assist you in paying your amount gradually. One can be set up independently online, over the phone, or in person. While interest and penalties will still be charged while your obligation is paid off, they may be less than what you would spend, for example, if you put your whole tax bill on a high-interest credit card.

In short, don't wait to file your return because you have a tax bill. By doing this, you run the risk of incurring additional late-filing costs for every full or partial month that your return is late. Instead, think about submitting your return, paying what you can, and researching an IRS payment plan or other options for tax debt relief.

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