Yes, you can make payment arrangements with the IRS. The agency offers a short-term plan of up to 180 days and long-term monthly installment agreements that can run for years, and most taxpayers can set one up online in a single session. Interest and the failure-to-pay penalty keep accruing while you pay, so the total cost rises the longer you take.
Your Plan Options
Short-Term Plan (Up to 180 Days)
If you can pay the full balance within 180 days, this is the simplest route. You qualify when you owe less than $100,000 in combined tax, penalties, and interest. There is no setup fee. Interest and the failure-to-pay penalty still run during those months, but because the window is short, the extra cost stays small.1Internal Revenue Service. Payment Plans; Installment Agreements
Long-Term Installment Agreement
Need more than 180 days? A long-term installment agreement sets fixed monthly payments. The IRS generally structures these to pay off the balance within 72 months, or before the 10-year collection statute expires, whichever comes first. A Direct Debit Installment Agreement, which pulls payments automatically from your bank account, carries the lowest setup fee and is the option the IRS prefers.1Internal Revenue Service. Payment Plans; Installment Agreements
Partial Payment Installment Agreement
When you genuinely cannot pay the full balance before the collection statute expires, a Partial Payment Installment Agreement lets you pay whatever monthly amount you can afford, and the IRS stops collecting the remaining balance once the statute runs out. These require detailed financial disclosure on Form 433-A or 433-B, and the IRS will expect you to put any significant asset equity toward the debt before approving one. Every PPIA needs managerial approval, so the process takes longer than a standard plan.2Internal Revenue Service. Partial Payment Installment Agreements and the Collection Statute Expiration Date
Who Qualifies
Before the IRS approves any plan, you need to clear a few baselines:
- All returns filed. Every required tax return from prior years must be on file. Missing returns get your request denied outright.3Internal Revenue Service. Instructions for Form 9465
- Current-year taxes covered. Your withholding or estimated payments for the current year must be enough to cover your ongoing liability. The IRS does not want you piling new debt on top of old debt.3Internal Revenue Service. Instructions for Form 9465
- No active bankruptcy. The automatic stay under 11 U.S.C. § 362 generally prevents the IRS from entering into a new installment agreement while a bankruptcy case is open.4Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay
For the fastest online processing, individuals must owe $50,000 or less in combined tax, penalties, and interest. Businesses can use a simplified In-Business Trust Fund Express agreement if the balance is $25,000 or less. Owing more does not disqualify you; it just means more financial documentation and a longer review.5Internal Revenue Service. 5.14.1 Securing Installment Agreements
How to Apply
The fastest route is the IRS Online Payment Agreement tool at irs.gov. You get an immediate approval or denial on screen once you submit.6Internal Revenue Service. Online Payment Agreement Application You will need your Social Security Number or Employer Identification Number and information about the tax balance you owe.
If you prefer paper, file Form 9465, the Installment Agreement Request. The form asks you to propose a monthly payment amount and pick a due date no later than the 28th of the month. If you leave the payment amount blank, the IRS defaults to dividing your balance by 72 months.7Internal Revenue Service. Form 9465 – Installment Agreement Request Mailed applications take considerably longer to process.
When You’ll Need to Show Your Finances
If your balance is above the streamlined thresholds, or you cannot afford the minimum payment the IRS calculates, you will need to give a detailed financial picture. Form 433-F captures monthly income, living expenses, and asset values. Wage earners and self-employed individuals may need Form 433-A, which digs deeper into bank accounts, investments, and real property. Businesses use Form 433-B.1Internal Revenue Service. Payment Plans; Installment Agreements
The IRS measures your expenses against its own Collection Financial Standards. Fixed national allowances apply to food, clothing, personal care, and out-of-pocket health care. Housing, utilities, and transportation are measured against local standards that vary by region. If your claimed expenses exceed the standards, the IRS will base your required payment on what it considers reasonable, not what you are actually spending.8Internal Revenue Service. Collection Financial Standards
What It Costs
Every long-term installment agreement carries a one-time setup fee. The amount depends on how you apply and whether you use direct debit:
- Direct debit, applied online: $22
- Direct debit, applied by phone, mail, or in person: $107
- Non-direct-debit, applied online: $69
- Non-direct-debit, applied by phone, mail, or in person: $178
Applying online with direct debit saves $156 compared with mailing a paper form without automatic payments.1Internal Revenue Service. Payment Plans; Installment Agreements
Low-Income Fee Relief
If your adjusted gross income is at or below 250% of the federal poverty guidelines, the setup fee is waived entirely when you agree to a Direct Debit Installment Agreement. Without direct debit, the fee drops to $43, and that amount is reimbursed once you complete the plan. You apply using Form 13844.9Internal Revenue Service. Application for Reduced User Fee for Installment Agreements
Interest and Penalties Keep Running
A payment plan does not freeze your balance. Interest accrues on the unpaid amount from the original due date of the return until you pay in full, regardless of any installment agreement.10Office of the Law Revision Counsel. 26 USC 6601 – Interest on Underpayment, Nonpayment, or Extensions of Time for Payment, of Tax For the first quarter of 2026, the underpayment interest rate is 7%, compounded daily, and it adjusts every quarter.11Internal Revenue Service. Quarterly Interest Rates
On top of interest, the failure-to-pay penalty adds 0.5% of the unpaid tax per month. One benefit of having an approved installment agreement: if you filed your return on time, that penalty rate drops to 0.25% per month while the agreement is in effect.12Office of the Law Revision Counsel. 26 USC 6651 – Failure to File Tax Return or to Pay Tax The combined effect means a $10,000 balance stretched over several years can cost thousands more than the original debt. Pay as much as you can upfront and pick the shortest timeline you can afford.
Levies and Liens
One of the most useful features of a payment plan is protection from IRS levy action. Under 26 U.S.C. § 6331(k), the IRS cannot seize your wages, bank accounts, or other property while an installment agreement is in effect. That protection also covers the period while your application is pending, for 30 days after a rejection, and during any appeal of a rejection or termination.13Office of the Law Revision Counsel. 26 USC 6331 – Levy and Distraint
Tax liens work differently. The IRS may still file a Notice of Federal Tax Lien against your property even after you enter a payment plan, which can affect your credit and your ability to sell or refinance assets. If you set up a Direct Debit Installment Agreement and owe $25,000 or less, you can request withdrawal of the lien after three consecutive on-time payments.14Internal Revenue Service. Understanding a Federal Tax Lien
Staying in Good Standing
Missing a payment, or failing to file and pay current-year taxes on time, puts you in default. The IRS sends Notice CP523, which warns that your installment agreement will be terminated and levy action will begin if you do not fix the problem within 30 days.15Internal Revenue Service. Understanding Your CP523 Notice A common trap: taxpayers set up a plan, feel relieved, then forget about estimated payments for the following year, and the whole arrangement unravels.
If you receive a CP523, you can cure the default by making the missed payments, or appeal the proposed termination through the IRS Collection Appeals Program within 30 days. Filing the appeal keeps the termination from taking effect while it is pending. A CAP decision is final and cannot be taken to Tax Court.16Internal Revenue Service. Collection Appeals Program (CAP)
Reinstating a defaulted agreement costs $10 online, or $89 by phone, mail, or in person. Low-income taxpayers pay $10 online or $43 through other channels.1Internal Revenue Service. Payment Plans; Installment Agreements
Modifying Your Plan
If you need to adjust your monthly payment or shift your due date, log into your IRS Online Account and revise the plan there. Online modifications cost $10. Changes made by phone, mail, or in person cost $89, though revisions to a Direct Debit agreement carry no fee. If your proposed new payment falls below the IRS minimum, you will be asked for updated financial information.1Internal Revenue Service. Payment Plans; Installment Agreements Contact the IRS before you miss a payment, not after. Lowering a payment while you are still in good standing is far simpler than reinstating a defaulted plan.
If Even a Payment Plan Is Out of Reach
Two other paths exist when a monthly payment would leave you unable to cover basic living expenses.
An Offer in Compromise settles your tax debt for less than the full amount. The IRS approves an OIC when the offered figure represents the most it can reasonably expect to collect. The agency explicitly says to explore all other payment options first, so this is a last resort. The application is lengthy, carries a $205 fee (waived for low-income applicants), and requires detailed financial disclosures similar to those for a PPIA.17Internal Revenue Service. Offer in Compromise
Currently Not Collectible status is for taxpayers who have no ability to pay at all. The IRS suspends active collection, meaning no levies or phone calls, but the debt remains on the books and interest and penalties continue to accrue. The IRS reviews your finances periodically and can resume collection if your circumstances improve. CNC does not make the debt disappear; it buys time until you are in a better position or until the collection statute expires.