IRS Installment Agreements

An installment agreement, often called a payment plan, lets you pay an IRS balance over time instead of all at once. It is one of the main collection options because it is available to many individuals, can often be set up online, and generally stops the IRS from levying while the request is pending. It is not free, though, because interest and penalties continue to grow until the balance is paid.

Types of payment plans

Short-term plan. If you can pay in full within 180 days, the IRS charges no setup fee. Individuals owing less than $100,000 in combined tax, penalties and interest can apply online. Interest and penalties still accrue until the balance is paid.

Long-term installment agreement. This is a monthly plan that runs longer than 180 days. The IRS instructions for Form 9465 describe several categories:

• Guaranteed. The tax owed is $10,000 or less, you filed all income tax returns and paid the tax due for the past five years, you had no prior installment agreement for income tax, and you agree to pay in full within three years.
• Streamlined. Assessed tax of $25,000 or less, or $25,001 to $50,000 with direct debit or payroll deduction. Payments must pay the balance within 72 months or before the collection statute expires, whichever is earlier. A financial statement is generally not required.
• Non-streamlined. For larger balances or smaller monthly payments than a standard formula allows, the IRS asks for financial information on a form such as Form 433-F.
• Partial payment. When the plan will not pay the whole balance before the collection statute expires, the IRS requires a financial statement and supporting documents and reviews the agreement from time to time.

What it costs to set up

The IRS publishes these setup fees. They are from the IRS payment plans page we reviewed in 2026 and can change, so confirm on irs.gov before you apply.

Card payments carry separate processing fees. Changes to an existing direct debit plan carry no fee.

Low-income taxpayers. If your adjusted gross income is at or below 250% of the federal poverty level, the setup fee is waived for a direct debit plan. Without direct debit, the fee is reduced to $43 and reimbursed when the agreement is completed, if conditions are met. If the IRS does not identify you as low income, use Form 13844 within 30 days of your acceptance letter.

How interest and penalties work

Interest keeps running on the unpaid balance, and the monthly failure-to-pay penalty continues up to its legal maximum. For months when an installment agreement is in effect, the penalty rate can be lower, but only if you filed on time and requested the agreement. See the failure-to-pay penalty and IRS interest pages.

How to apply

1. Gather the facts. Know your balance by year and confirm that every required return is filed. See unfiled tax returns if one is missing.
2. Apply online if you can. Individuals use their IRS online account or the Online Payment Agreement. You will get an immediate answer on whether the plan is approved.
3. Use a form if you cannot apply online. File Form 9465, and attach Form 433-F when its instructions require it. If you cannot make the minimum payment, the IRS may ask for Form 433-F, 433-H or 433-B.
4. Businesses. The IRS does not offer online applications for business accounts; businesses should use the number on their notice or visit a local office.

While a request is pending, the IRS is generally prohibited from levying, and the collection period is suspended. If the IRS rejects your request or proposes to terminate an agreement, the collection period is suspended for 30 days, and for as long as an appeal is pending.

Staying in compliance

• Make each payment on time.
• File every future return on time and pay the full amount due.
• Expect any federal refund to be applied to the balance, and keep paying your regular installments anyway.
• Tell the IRS if your address changes.

A plan can default if you miss a payment, do not pay a later balance, or give incomplete or inaccurate financial information. If you get a notice of intent to terminate, contact the IRS right away. You may be able to reinstate the plan online, and you may be able to appeal through the Collection Appeals Program. The IRS may file a Notice of Federal Tax Lien or levy after a default; see IRS liens and levies.

Common mistakes

• Choosing the lowest monthly payment without noticing how much interest accrues.
• Ignoring a balance due notice while waiting for approval.

How we can help

We can confirm that your returns are filed, calculate which plan type fits your balance, prepare an online or paper request, and help you respond if a plan is rejected or in danger of default. Where a plan is not realistic, we can compare an offer in compromise or hardship status. We cannot promise the IRS will approve a specific payment.

Contact us to review your balance and options.

Frequently asked questions

General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.