Can't Pay Your Tax Bill? IRS Payment Plans Explained

2 hours ago

7 min read

A tax bill you can't pay is scary, but the IRS has a standard way to handle it: a payment plan. Most people who owe $50,000 or less can set one up online in one sitting, and plans that pay off within 180 days have no setup fee. Here's how the options work, what they cost and how to keep a plan from falling apart.

AT A GLANCE

Short-term plan: Pay within 180 days or less, with a $0 setup fee.
Long-term plan (installment agreement): Monthly payments. Setup fees online are $29 with direct debit or $69 without.
Apply online if you owe $50,000 or less (long-term) or less than $100,000 (short-term), and you've filed all required returns.
Low income? If your AGI is at or below 250% of the federal poverty guidelines, the fee is waived with direct debit.
Penalty cut: If you filed on time, the late-payment penalty drops from 0.5% to 0.25% a month while your plan is in place.
Still file on time. Interest and penalties keep growing until you pay in full.

First: file even if you can't pay

The IRS says you can avoid the late-payment penalty by filing and paying by the due date. An extension of time to file doesn't give you more time to pay, so a payment plan is how you spread the bill out. Pay what you can now, then set up a plan for the rest.

A plan also protects you. While a payment plan request is being considered or is in effect, the IRS generally won't take enforced collection actions like a levy. That protection lasts for 30 days after a request is rejected or a plan is terminated, and while an appeal of that decision is being reviewed.

If you can't pay the full amount due, pay as much as you can. (IRS)

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The three ways to pay

Option	Who it's for	Setup fee
Pay in full now	You can cover the balance today	$0, plus card processing fees if you pay by card
Short-term plan	You can pay in 180 days or less	$0
Long-term plan	You need to pay monthly over a longer time	$29 to $178 depending on how you apply and pay, with low-income reductions

Paying in full stops future penalties and interest. With either plan, they keep building until the balance is gone.

Short-term plan

If you can pay within 180 days, this is the cheapest plan because there's no setup fee. Individuals can apply online if they owe less than $100,000 in combined tax, penalties and interest. Only individual taxpayers can apply for a short-term plan online. Businesses have to call.

Long-term plan

Most people who need months or years qualify for what the IRS now calls a simple payment plan. Under the Form 9465 instructions, you generally qualify if:

Your total balance of tax, penalties and interest is $50,000 or less
Your payments will pay off the balance before the collection deadline, usually 10 years after the tax was assessed
You've filed all required tax returns

A simple plan generally doesn't require a financial statement. The IRS also doesn't usually file a Notice of Federal Tax Lien for one, though it can in some situations.

If you don't list a monthly amount on Form 9465, the IRS divides your balance by 72 months to set one.

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What a long-term plan costs

These are the user fees on IRS.gov and in the Form 9465 instructions (in effect as of July 5, 2026):

How you pay each month	Apply online	Apply by phone, mail or in person	Low-income taxpayer
Direct debit from checking	$29	$107	Fee waived
Check, money order, card or Direct Pay	$69	$178	$43, may be reimbursed when the plan is finished
Payroll deduction (Form 2159)	Not available online	$178	See Form 13844

Changing a plan later costs $6 online or $89 by phone, mail or in person ($43 for low-income taxpayers). Changes to an existing direct debit plan are free.

The cheapest long-term setup is applying online and choosing direct debit. The IRS also suggests direct debit as a way to make sure payments arrive on time.

The low-income fee break

You're a low-income taxpayer if your adjusted gross income for the most recent year available is at or below 250% of the federal poverty guidelines. The IRS usually figures this out automatically.

If it doesn't flag you but you think you qualify, file Form 13844, Application for Reduced User Fee for Installment Agreements, within 30 days of your plan's acceptance letter. Mail it to:

Internal Revenue Service, PO Box 219236, Stop 5050, Kansas City, MO 64121-9236

The only way to get the fee fully waived is to agree to direct debit. If you can't use direct debit, you pay the $43 fee and get it back once the plan is completed, as long as you check box 12c on Form 9465.

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The penalty you'll still pay, and how a plan shrinks it

The failure-to-pay penalty is normally 0.5% of unpaid tax for each month or part of a month it stays unpaid, up to 25%. Interest is charged on top of that, including on the penalties.

If you filed your return on time and you're an individual with an approved payment plan, the penalty drops to 0.25% a month while the plan is in place.

If you ignore a notice of intent to levy for 10 days, it jumps to 1% a month.

Situation	Monthly failure-to-pay penalty
Unpaid, no plan	0.5%
Filed on time, approved payment plan	0.25%
10 days after a notice of intent to levy	1%

The IRS may remove some penalties if you acted in good faith and had reasonable cause. By law, it can't remove interest unless the related penalty is removed or reduced.

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How to apply

Online (fastest)

Create or sign in to your IRS Online Account. You'll need photo ID to create one.
Have your numbers ready. If you just filed and haven't gotten a bill, use the balance due from your return. For direct debit, have your bank routing and account numbers.
Choose your plan type and monthly payment. You'll find out right away whether you're approved.

By form

If you can't apply online, mail Form 9465, Installment Agreement Request. The IRS may ask for Form 433-F, Collection Information Statement, especially if you owe more or need a smaller payment. You'll usually hear back within 30 days, though returns filed after March 31 may take longer.

You can pick a due date from the 1st to the 28th of the month.

By phone

Individuals can call 800-829-1040, or the number on their bill or notice. Businesses call 800-829-4933.

Don't use Form 9465 if you're in bankruptcy or the IRS is reviewing your offer in compromise. Call 800-829-1040 instead.

The guaranteed plan

If you owe $10,000 or less in tax (not counting interest and penalties), the IRS must approve your plan if all of these are true:

You and your spouse filed and paid on time for the past five years
You haven't had a payment plan for income tax in the past five years
You agree to pay in full within three years and follow tax laws during the plan
You can't pay the full amount when it's due

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Keeping your plan from defaulting

A plan can be ended if you miss payments or don't pay a new balance on a return you file later. The IRS's checklist:

Pay at least the minimum each month, on time
File every future return on time and pay any new tax in full. Raise your withholding or estimated payments if needed.
Keep paying even if the IRS takes your refund. Refunds go toward your balance until it's paid off, but they don't replace your monthly payment.
Tell the IRS if you move (Form 8822)
If you get a notice of intent to terminate your plan, contact the IRS immediately

You can change your payment amount or date, switch to direct debit or reinstate after a default through your Online Account. A defaulted plan may come with a reinstatement fee.

If the IRS plans to end your agreement, you may be able to appeal through the Collection Appeals Program first.

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If you can't afford any monthly payment

Currently Not Collectible status

If paying would leave you unable to cover basic living costs, the IRS can temporarily pause most collection by marking your account Currently Not Collectible. The debt isn't forgiven, and penalties and interest keep growing. The IRS may still file a lien, keep your refunds and review your finances later. To ask, call 800-829-1040 or the number on your notice. Expect to fill out a financial form such as Form 433-F.

Offer in compromise

An offer in compromise may let you settle for less than you owe if you can't pay in full or doing so would cause hardship. The IRS generally won't accept one if you could pay through a payment plan or your assets. The application fee is $205, waived for people who meet the low-income qualifications. Use the IRS's Pre-Qualifier Tool before applying.

IF YOU OWE AND CAN'T PAY THIS WEEK

File your return by its due date and pay whatever you can.
Sign in to your IRS Online Account and check your exact balance.
If you can pay in 180 days, choose the short-term plan. If not, pick a long-term plan with direct debit.
If you think you're low income and weren't flagged, file Form 13844 within 30 days of your acceptance letter.

More help

Related guides

Bank account garnishment: which federal benefits are protected

Official sources

Last checked: October 30, 2026. The plan types, fees, online limits and default rules come from the IRS payment plan pages and the Form 9465 instructions. Penalty rates come from the IRS failure-to-pay penalty page. Hardship and offer details come from the IRS collection pages listed above.

This is general information, not tax advice. If your situation is complicated, a Low Income Taxpayer Clinic or the Taxpayer Advocate Service may be able to help.