Taxes
IRS payment plans: who qualifies and what they cost
Most people who owe the IRS can get a payment plan online in about fifteen minutes. Balances under $50,000 (tax, penalties and interest combined) qualify for a long-term installment agreement with up to 72 months to pay; smaller balances can be paid off in 180 days with no setup fee. Penalties and interest keep accruing on the unpaid balance, so pay as much as you can up front.
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How to apply
Use the IRS Online Payment Agreement tool at irs.gov. You will need your filed returns, the balance, and a bank account for direct debit. Approval for standard plans is immediate. Balances over $50,000 require a financial statement (Form 433-F) and are handled by phone or by a representative.
What it costs
The setup fee varies by how you apply and pay; direct debit set up online is the cheapest, and low-income taxpayers can have it waived or refunded. Interest (the federal short-term rate plus 3%, adjusted quarterly) and the reduced failure-to-pay penalty continue until the balance is zero.
When a plan is the wrong tool
If the monthly payment would leave you unable to cover basic living expenses, ask about Currently Not Collectible status instead. If the balance is far larger than you could ever pay, an Offer in Compromise may apply. A plan you cannot keep is worse than no plan: defaulting restarts collection.
Questions people ask
- Does a payment plan stop a levy?
- An approved installment agreement generally stops new levies while you stay current. A levy already in place may need to be released separately.
- Can I pay less than the IRS asks?
- For balances under $50,000, the IRS accepts a plan that pays the balance within 72 months without asking about your finances. For a lower payment than that, you will need to provide a financial statement.