Can You Defer Tax Payments? IRS Installment Plans and Offers

Yes, you can defer tax payments to the IRS, and the agency offers several routes depending on how long you need: a short-term extension of up to 180 days, monthly installment agreements that stretch payment over years, a hardship status that pauses collection entirely, and a settlement program that lets qualifying taxpayers pay less than they owe. Interest and the failure-to-pay penalty generally keep running under every option, so the sooner you pick a path, the less the delay costs.

Short-Term Payment Plan: Up to 180 Days

If you just need a few extra months, the IRS offers a short-term payment plan of up to 180 days with no setup fee.¹ To apply online, your combined balance of tax, penalties, and interest must be under $100,000.² This is not a filing extension. It gives you extra time to send money, not extra time to prepare the return.

While the clock runs, interest and the failure-to-pay penalty continue to build. The penalty is 0.5% of the unpaid balance per month or partial month, dropping to 0.25% once you have an approved payment plan.³ Interest compounds daily at a rate the IRS resets quarterly; it was 7% for the first quarter of 2026 and 6% for the second.⁴

Installment Agreements: Paying Over Several Years

When 180 days isn’t enough, an installment agreement lets you pay monthly. The IRS runs three main tiers, and which one you fit into depends on how much you owe and whether the agency needs to see your finances.

Guaranteed Installment Agreement

If you owe $10,000 or less in income tax, not counting interest and penalties, the IRS is required by law to accept a monthly payment proposal so long as you meet each condition: no failure to file or pay in any of the previous five tax years, no installment agreement during that same five-year window, and agreement to pay in full within three years.⁵ For smaller balances that fit, this is the surest path.

Streamlined Installment Agreement

For a combined balance of $50,000 or less in tax, penalties, and interest, a streamlined installment agreement is available without submitting detailed financial statements. You generally get up to 72 months.⁶ If your balance is between $25,001 and $50,000, the IRS requires direct debit from a bank account or payroll deduction rather than monthly checks.⁷

Partial Payment Installment Agreement

If you owe more than $50,000, or you can’t afford a monthly amount large enough to clear the balance in 72 months, the IRS may agree to a partial payment installment agreement. The monthly figure is set to what you can afford after basic living expenses, and the plan may not fully pay the debt before the collection deadline expires. You’ll need to submit detailed financial information covering income, monthly expenses, and the value of your assets.⁵

Setup Fees

Every installment agreement carries a one-time setup fee, and how you apply and pay changes the price:

Online with direct debit: $22
Online with other payment methods: $69
Phone, mail, or in person with direct debit: $107
Phone, mail, or in person with other payment methods: $178
Low-income taxpayers with direct debit: waived
Low-income taxpayers with other payment methods: $43, which may be reimbursed

Short-term plans of 180 days or less carry no setup fee regardless of how you apply.¹

Currently Not Collectible: Pausing Collection Altogether

If paying anything toward your tax debt would leave you unable to cover basic living expenses like food, housing, and utilities, the IRS may place your account in Currently Not Collectible status. Active collection stops. The IRS will not levy your wages, bank accounts, or other property while the hardship lasts.⁸

To decide, the IRS compares your monthly income against standardized national and local allowances for necessities. If your income doesn’t cover those basics plus any tax payment, the account goes dormant.⁹ The debt itself is not forgiven. Interest and penalties keep building, the IRS can still keep future refunds and apply them to the balance, and the agency reviews your income each year. If your finances improve, collection can resume.⁸

Offer in Compromise: Paying Less Than You Owe

An Offer in Compromise lets you settle for less than the full balance. The IRS looks at your income, expenses, assets, and overall ability to pay, and generally accepts only when the offer represents the most it could reasonably expect to collect. You must have filed all required returns, be current on estimated tax payments and federal tax deposits, and not be in an open bankruptcy proceeding.¹⁰

The application carries a $205 nonrefundable fee plus an initial payment. A lump sum offer, paid in five or fewer installments, requires 20% of the proposed amount with the application. A periodic payment offer, spread over six or more months, requires the first monthly payment with the application and continued monthly payments while the IRS reviews the case.¹¹ Taxpayers who meet the low-income certification guidelines on Form 656 don’t have to send the fee or the initial payment.¹²

Penalty Abatement: Cutting the Cost of the Delay

Even when you still owe the underlying tax, you may be able to knock down the penalties stacked on top. The IRS offers two main paths.

First-Time Abate

If your compliance record for the three tax years before the penalty year is clean, meaning all required returns filed and no penalties (or any penalty removed for a reason other than this program), the IRS may waive a failure-to-file or failure-to-pay penalty as a one-time courtesy.¹³ You can request it before paying the underlying tax, though the failure-to-pay penalty continues to build until you clear the balance.

Reasonable Cause Relief

If you don’t qualify for First-Time Abate, you can still ask the IRS to remove penalties by showing that circumstances beyond your control kept you from filing or paying on time. Recognized situations include fire or natural disaster, serious illness or the death of an immediate family member, inability to obtain necessary records, and system issues that delayed an electronic filing or payment.¹⁴ Documentation supporting the hardship is generally expected.

The 10-Year Collection Clock

The IRS does not have forever. Federal law gives the agency 10 years from the date a tax is assessed to collect by levy or court action.¹⁵ Once that Collection Statute Expiration Date passes, the debt generally becomes unenforceable.

Certain actions pause the clock. Time spent with a pending Offer in Compromise, in bankruptcy, or living outside the country doesn’t count toward the deadline, and entering an installment agreement can extend it as well. If you’re weighing a long-term installment agreement or an Offer in Compromise, it’s worth knowing where your 10-year clock stands, because some balances may expire on their own before a payment plan would finish.

How to Apply

The simplest route for a short-term plan or a streamlined installment agreement is the IRS Online Payment Agreement tool. If you owe under $100,000 for a short-term plan or under $50,000 for an installment agreement and have filed all required returns, you can apply online and get an immediate answer.²

For anything requiring a financial review, expect more paperwork. Form 9465 is the standard request for a monthly installment agreement. Form 433-F is a shorter collection information statement used for many installment agreements handled by phone or in person. Form 433-A is the more detailed financial statement used for Currently Not Collectible requests, partial payment plans, and other hardship-based relief, covering income sources, monthly living expenses, bank balances, vehicle equity, and other assets. Form 433-A (OIC) is the version submitted with Form 656 for an Offer in Compromise. The IRS measures your claimed expenses against its own national and local allowances for food, housing, transportation, and other necessities, and unexplained gaps between the two can lead to denial or termination of an existing agreement.

Complex requests generally go by mail to the address on your most recent IRS notice, or through a revenue officer or the Automated Collection System by phone. Keep copies of everything you send. If you want a representative to negotiate for you, file Form 2848 (Power of Attorney); attorneys, CPAs, and enrolled agents are the professionals most commonly authorized to handle collection matters. If the IRS denies your request, you generally have 30 days from the date of the denial letter to file a protest with the Independent Office of Appeals.¹⁶

1
Internal Revenue Service. Payment Plans; Installment Agreements
2
Internal Revenue Service. Online Payment Agreement Application
3
Internal Revenue Service. Failure to Pay Penalty
4
Internal Revenue Service. Internal Revenue Bulletin: 2026-08
5
Office of the Law Revision Counsel. 26 U.S. Code 6159 – Agreements for Payment of Tax Liability in Installments
6
Internal Revenue Service. Topic No. 202, Tax Payment Options
7
Internal Revenue Service. 5.14.5 Streamlined, Guaranteed and In-Business Trust Fund Express Installment Agreements
8
Taxpayer Advocate Service. Currently Not Collectible (CNC)
9
Internal Revenue Service. 5.16.1 Currently Not Collectible
10
Internal Revenue Service. Offer in Compromise – Frequently Asked Questions
11
Internal Revenue Service. Form 656, Offer in Compromise
12
Internal Revenue Service. Offer in Compromise
13
Internal Revenue Service. Administrative Penalty Relief
14
Internal Revenue Service. Penalty Relief for Reasonable Cause
15
Office of the Law Revision Counsel. 26 U.S. Code 6502 – Collection After Assessment
16
Internal Revenue Service. Appeals Process