Can You Pay the IRS in Installments? Plans, Fees, and Liens

Yes, you can pay the IRS in installments, and most people who owe back taxes qualify. IRS installment payment plans come in two flavors: a short-term plan giving you up to 180 days to pay in full with no setup fee, and a long-term installment agreement spreading payments across as many as 72 months with setup fees starting at $22. Interest and penalties keep accruing on either one, so the sooner you apply and the faster you pay, the less the debt costs you.

Which Plan You Qualify For

The short-term option gives you up to 180 days to pay your entire balance. There’s no setup fee no matter how you apply. Only individual taxpayers can set one up online, and you need to owe less than $100,000 in combined tax, penalties, and interest to use the online tool.¹ Penalties and interest still add up during those 180 days, so this isn’t free money — it’s just cheaper than the alternative.

A long-term installment agreement lets you make monthly payments for up to 72 months.² You can apply online if you owe $50,000 or less in combined tax, penalties, and interest and you’ve filed all required returns.¹ Both individuals and businesses qualify, though businesses face lower thresholds for streamlined processing.

Your exact terms depend on the total balance and how much time the IRS has left to collect. Under federal law, the IRS generally has 10 years from the date a tax is assessed to collect it.³ Whatever plan the IRS approves has to resolve your debt inside that window.

Setup Fees

Two things determine your setup fee: whether you apply online or by phone, mail, or in person, and whether you authorize automatic monthly withdrawals from a bank account (a direct debit installment agreement, or DDIA). Applying online with direct debit is the cheapest route by far.

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
Short-term plan (any method): $0

These are the fees current as of March 2026.¹ Lower-income taxpayers pay less or nothing (covered further down). The fee is usually added to your balance rather than collected upfront.

What You Need Before You Apply

Have your Social Security Number or ITIN ready if you’re an individual, or your Employer Identification Number for a business. You’ll need the exact balance owed from your most recent IRS notice, and if you want direct debit, your bank’s routing and account numbers.⁴

Form 9465 is the paper application for an installment agreement.⁵ It asks you to propose a monthly payment amount and pick a payment date between the 1st and the 28th of each month.⁶ If the debt is from a joint return, you’ll also need your spouse’s information and income. A quick way to estimate what you’d pay monthly on a long-term plan is to divide the balance by 72.

If your combined balance is under $50,000, you qualify for streamlined processing and won’t need a detailed financial disclosure. For businesses, the streamlined threshold is $25,000 or less in trust fund taxes.⁷ Above those amounts, you’ll submit Form 433-F alongside your application, disclosing income, expenses, assets, and bank accounts.

How to Apply

The fastest way is the IRS Online Payment Agreement tool. Log in with your IRS username or ID.me credentials, pick your plan type and terms, and you’ll get an immediate approval or denial.⁴ The whole thing takes a few minutes with nothing to mail.⁸

To apply on paper, mail Form 9465 to the address in the form’s instructions, which varies by state and tax type. You can also attach it to the front of your tax return when you file.⁶ Mailed applications are processed manually and take longer. To apply by phone, call 800-829-1040 for individual accounts or 800-829-4933 for businesses.¹

There’s also a payroll deduction agreement, using Form 2159, where your employer forwards payments to the IRS from your paycheck. Your employer has to agree to participate, and this isn’t the same as a direct debit installment agreement, so you don’t get the lower DDIA setup fee.⁹

After You Apply

Online applications get an instant response. Mailed Form 9465 requests generally get a reply within 30 days, though it can take longer if you filed the underlying return after March 31.¹⁰ If the IRS asks for more financial information, respond quickly, because delays can lead to a denial.

Once you’re approved, your first payment is due by the date in the acceptance letter. One thing that surprises people: the IRS will apply any future tax refunds to your remaining balance while you’re on the plan, and you still have to make all your scheduled monthly payments on top of that offset.¹ The upside is that the offset shrinks your balance faster and cuts your total interest.

Interest and Penalties Keep Running

An installment agreement is not a pause button. Interest and the failure-to-pay penalty keep accruing until the balance hits zero.

Interest runs at the federal short-term rate plus three percentage points, compounded daily.¹¹ The rate resets every quarter. It was 7% for the first quarter of 2026 and dropped to 6% for the second quarter (April through June 2026).¹² On a $20,000 balance, daily compounding at 6% adds roughly $100 a month in interest alone.

There is one real break. If you filed your return on time, the failure-to-pay penalty drops from 0.5% per month to 0.25% per month while an installment agreement is in effect.¹³ You only get that reduction if you filed by the deadline. If you haven’t filed yet, do it now. The failure-to-file penalty runs at 5% per month, ten times the failure-to-pay rate, up to a 25% maximum.¹⁴

If your compliance history over the past three years is clean — all returns filed on time, no penalties — you can request First Time Abate relief, which can wipe out the failure-to-pay penalty. You have to ask for it separately from the installment agreement.¹⁵ Interest is never waived.

Payment Plans and Tax Liens

Having an installment agreement doesn’t automatically stop the IRS from filing a Notice of Federal Tax Lien. The IRS generally files one when the unpaid balance is $10,000 or more.¹⁶ A lien attaches to what you own, can appear on your credit report, and makes selling property or borrowing harder.

The counterweight: if you qualify for a streamlined, guaranteed, or in-business trust fund express installment agreement, the IRS is generally not required to make a lien determination absent special circumstances like an impending bankruptcy.¹⁶ Staying under the $50,000 individual threshold and using direct debit substantially cuts your lien risk.

If You Owe More Than $50,000

You can still get an installment agreement above $50,000, but not online. You’ll submit Form 9465 with a completed Form 433-F disclosing income, monthly expenses, bank accounts, and assets.¹ The IRS uses that information to decide whether to approve you and to set a monthly payment based on what you can actually pay.

Expect more scrutiny. The IRS may require you to liquidate assets or borrow against equity before approving a plan, and a federal tax lien is more likely at these balances. If the payment the IRS calculates is more than you can afford, you have other options, described below.

Changing Your Plan or Falling Behind

If your finances change, modify the agreement rather than let it default. Through your IRS Online Account you can adjust the plan type, payment date, and monthly amount.¹ If your proposed new amount is below the IRS minimum, the system will ask you to submit Form 433-F or Form 433-H for a fuller financial review. If you can’t do it online, call 800-829-1040 for individuals or 800-829-4933 for businesses. Reach out before you miss a payment. Proactively asking to modify keeps your agreement alive; simply stopping payments starts default proceedings.

Missing a payment, or failing to file a future return while on a plan, can trigger a Notice CP523, the IRS’s formal notice of intent to terminate your installment agreement and begin levy action. You get 30 days from the date on that notice to pay the past-due amount and get back on track.¹⁷

If the agreement is terminated and appeals are exhausted, the IRS can levy wages, bank accounts, and other property, and can file a federal tax lien if none is already in place. For taxpayers whose debt exceeds the seriously delinquent threshold, which adjusts annually for inflation, the State Department can deny or revoke your passport.¹⁷

You can appeal a termination by submitting Form 9423 (Collection Appeal Request) to the office that took the action within 30 days. Collection activity typically pauses while the appeal is pending.¹⁸ To restart a terminated plan, expect a reinstatement fee.¹

Reduced Fees for Lower-Income Taxpayers

If your adjusted gross income is at or below 250% of the federal poverty guidelines, you count as a low-income taxpayer for installment agreement purposes and pay much less. The reduced setup fee is $43, and even that can be waived or reimbursed depending on how you pay.¹⁹

Set up direct debit and the IRS waives the setup fee entirely. Without direct debit, you pay the $43 upfront but the IRS reimburses it after you finish all payments under the agreement.¹⁹

For 2026, the AGI thresholds in the 48 contiguous states and D.C. are:

1 person: $39,900
2 people: $54,100
3 people: $68,300
4 people: $82,500
5 people: $96,700

Alaska and Hawaii use higher thresholds. To claim the reduced fee, submit Form 13844 within 30 days of receiving your installment agreement acceptance letter.¹⁹ That 30-day window is firm. The reduced fee doesn’t apply to corporations or partnerships.

When a Regular Plan Won’t Work

A standard installment agreement assumes you can pay the full amount within the collection period. If you can’t, there are other paths.

A partial payment installment agreement (PPIA) lets you pay monthly based on what you can actually afford, even if the total won’t cover your full debt before the 10-year collection statute runs out. The IRS will analyze your assets and income first, and you may need to try selling or borrowing against property with equity. Every PPIA needs managerial approval.²⁰

An offer in compromise lets you settle for less than you owe. The IRS considers it when you can’t pay through an installment agreement and don’t have enough equity to cover the balance. If they conclude you can pay in full, they’ll send you back to a regular plan.²¹

If you can’t afford any monthly payment at all, the IRS can put your account in Currently Not Collectible status. That applies when paying would keep you from covering basic living expenses, such as having no income, being incarcerated, or living only on Social Security or unemployment.²² The debt doesn’t go away and interest keeps running, but active collection stops until your situation improves or the 10-year statute expires.

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Office of the Law Revision Counsel. 26 U.S. Code 6502 – Collection After Assessment
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Internal Revenue Service. About Form 9465, Installment Agreement Request
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Internal Revenue Service. Notice CP523 – Notice of Intent to Levy
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Internal Revenue Service. Form 9423, Collection Appeal Request
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