Payment Plans

It’s in your best interest to pay your tax debt as soon as possible because paying can limit the penalties and interest the IRS may charge.

However, if you can’t pay your taxes in full, the IRS offers a number of payment options. Depending on the type of tax you owe, and how much, different options are available, ranging from short term extensions, to installment agreements, to an offer in compromise. Each has different requirements and fees. 

Payment plans are just one option if you can't pay. Visit I can’t pay my taxes for other options. 

Before you can enter into any payment agreement with the IRS, you need to file all your required tax returns. This way, all the taxes you owe will be included in one plan. 

If you owe individual tax debts or business taxes on an active or closed business (not trust fund taxes)...

... and you haven’t received a notice yet

You can make estimated tax payments or federal tax deposits before filing your tax return, and voluntary payments after you file, reducing the penalties and interest. You can use the IRS Electronic Federal Tax Payment System (EFTPS), as well as other electronic payment options.

... or once you have a notice

If you’ve received a notice from the IRS, call the number on the notice to arrange payment. The IRS may allow you time to pay your debt in full:

  • Up to 120 days if your taxes haven’t been assessed yet (placed on your account).
  • Up to 60 days if the taxes have already been assessed.

If you know you won’t be able to pay the taxes in either of these times, consider these other options:

If the IRS agrees to an installment agreement or an offer in compromise, you’ll need to make payments you agreed to. You’ll also need to stay current in filing and paying your taxes during the time of the agreement, and if you enter into an offer in compromise, for five years after the IRS accepts your offer. 

Penalties, interest, held refunds, and fees

  • Even if the IRS agrees to an installment agreement, it will still charge penalties and interest and may file a Notice of Federal Tax Lien. For more information, see IRS Publication 594, The IRS Collection Process.
  • Even if it approves an installment agreement, the IRS will generally keep any expected tax refunds and apply them to your debt.
  • You’ll need to pay a fee if you enter into an installment agreement, and generally must pay a user fee to enter into an offer in compromise

Timeline for collecting debt

Usually the IRS has ten years from the date it assessed the tax (placed on your account) to collect the tax. The time to collect, however, will be extended while your request for an installment agreement or offer in compromise is pending. Other actions can extend the time to collect as well. IRS Publication 594, IRS Collection Process, covers this topic in detail. 

If the IRS denies your request for a payment plan

If you’re eligible for an installment agreement or offer in compromise, and the IRS denies your request or rejects your offer, you have the right to appeal that decision to the IRS Office of Appeals. Use IRS Form 9423Collection Appeal Request

Also, see IRS Publication 594, IRS Collection Process

Have a different tax issue?  Browse common issues and situations at Get Help.

Is your tax problem more complex?  If your issue is causing you financial hardship, you have tried repeatedly and are not receiving a response from the IRS, or you feel your taxpayer rights are being violated, consider contacting TAS.

Do you feel that you need help from a tax professional but can’t afford one? You may be eligible for representation from an attorney, CPA, or enrolled agent associated with a Low Income Taxpayer Clinic.

Last modified July 5, 2016