IRS Payment Plan: Six Options for Owing the IRS.
Updated
An IRS payment plan lets you pay back taxes over time instead of all at once. Long-term plans are called installment agreements; a short-term plan gives you up to 180 days. This guide compares six options, including the current Simple Payment Plans, so you can understand the monthly payments, repayment period, and collection rules that apply to your case.
The basics
What Is an IRS Payment Plan?
A long-term IRS payment plan (the IRS's official term is "installment agreement") is a formal agreement between you and the Internal Revenue Service to pay off your federal tax debt over a set period instead of in a single lump sum. The IRS published these programs because the federal government would rather collect a balance over time than try to seize your paycheck or your bank account and lose the rest.
While an installment agreement is active and in good standing, the IRS generally cannot issue a new levy, subject to legal exceptions. If a levy is already in place, see how an IRS levy release is requested. You make the agreed payments while interest and applicable penalties continue on the unpaid balance. A reduced failure-to-pay penalty may apply to qualifying individuals who filed on time; the interest rate is not reduced simply because you have a plan. See what a past-due tax obligation costs in penalties and interest.
The six options below have different requirements. Eligibility depends on the balance, the type of tax, filing and current-payment compliance, and what you can pay before the collection deadline. Some options need a detailed financial statement. The short-term plan has no setup fee, while long-term installment agreements normally do.
IRS installment agreement types
Six IRS Payment Options, Explained
These options have different application paths, fees, and requirements. The IRS updated its payment-plan criteria in July 2026, replacing the former streamlined and business trust fund express rules. The cards below use the current names and terms.
Short-Term Payment Plan
- Duration
- Up to 180 days
- Eligibility
- Total balance owed (tax + penalties + interest) under $100,000
For taxpayers who can pay the full balance within 180 days. No setup fee. Interest and penalties continue to accrue until the balance is paid in full. The fastest, simplest IRS payment plan to qualify for if you have the cash flow.
Best for: Recently filed a return and just need a few months to pay it off.
Guaranteed Installment Agreement
- Duration
- Up to 36 months
- Eligibility
- Income tax owed of $10,000 or less (excluding penalties and interest)
The IRS must accept this agreement when the legal conditions are met. These include five years of filing and payment compliance, no installment agreement in that period, and full payment within three years or the collection deadline, whichever comes first. The taxpayer must remain compliant during the plan.
Best for: Owe $10,000 or less in income tax and meet the filing, payment, and repayment requirements.
Simple Payment Plan (Formerly Streamlined)
- Duration
- Up to the collection deadline, generally 10 years from assessment
- Eligibility
- Assessed tax, penalties, and interest of $50,000 or less for individuals
The IRS replaced the former streamlined criteria with Simple Payment Plans. A qualifying individual does not need a collection information statement and must pay in full by the collection deadline. The former 72-month limit no longer applies; the available term depends on the account.
Best for: Owe $50,000 or less, are current on filing and required payments, and can pay the full balance within the allowed term.
Non-Simple Installment Agreement
- Duration
- Negotiated case-by-case
- Eligibility
- Total balance over $50,000
For cases outside the Simple Payment Plan criteria, including individual balances over $50,000 or payments that will not clear the debt by the collection deadline. The IRS may require Form 433-A or 433-F showing income, assets, and expenses. Professional representation can help with the financial review.
Best for: Owe over $50,000, or need terms outside the Simple Payment Plan criteria.
Partial Payment Installment Agreement
- Duration
- Until collection statute expires
- Eligibility
- A balance that cannot be paid in full before the collection deadline
A monthly payment based on ability to pay when full payment before the collection deadline is not possible. Requires financial disclosure, IRS approval, and periodic review. The collection period is generally ten years from assessment, but certain events can extend or suspend it; this is not automatic forgiveness ten years after filing.
Best for: Cannot realistically pay the full balance within the remaining collection period.
Simple Payment Plan (Business Trust Fund)
- Duration
- Full payment by the collection deadline
- Eligibility
- Assessed business trust fund balance of $25,000 or less
This replaces the former In-Business Trust Fund Express agreement. Qualifying businesses must be current on returns and required payments; a financial statement is not required. The old 24-month rule has been removed. Cases involving a simultaneous levy-release request need a different financial review.
Best for: A business with payroll tax debt within the limit that can meet current filing, deposit, and repayment requirements.
Short-term vs. long-term
Short-Term vs. Long-Term IRS Payment Plans
A short-term plan gives you up to 180 days to pay in full and has no setup fee. A long-term plan, the installment agreement, means monthly payments for years and carries a setup fee.
Short-Term: 180 Days or Less
Open to individuals who owe under $100,000 in tax, penalties, and interest and can pay everything within 180 days. Interest and penalties keep accruing until the balance is paid.
Long-Term: Monthly Payments
For balances you cannot pay in 180 days. The term runs up to the collection deadline, so the IRS looks at how much you owe, what you can pay each month, and how long it has until the debt expires.
What Are IRS Simple Payment Plans?
Simple Payment Plans are the IRS's newest long-term plans. The IRS page on Simple Payment Plans was updated June 27, 2026, and the Internal Revenue Manual revision of July 21, 2026 replaced the streamlined and in-business trust fund express agreements with them.
If you owe $50,000 or less and are current on filing and payments, you can pay over up to 10 years or until the collection deadline, whichever is earlier. The 72-month limit from the old streamlined rules is gone, so older guides that quote it are out of date.
Costs
IRS Payment Plan Setup Fees
The IRS charges a one-time setup fee when you establish an installment agreement. The fee depends on how you apply (online vs. phone/mail/in-person) and how you pay (direct debit vs. other). Direct debit is cheaper because it costs the IRS less to administer.
| Application method | Fee |
|---|---|
| Online Payment Agreement (OPA), pay by direct debit | $29 |
| Online Payment Agreement (OPA), other payment method | $69 |
| By phone, mail, or in-person, pay by direct debit | $107 |
| By phone, mail, or in-person, other payment method | $178 |
| Revise an existing agreement: online / phone, mail, or in-person | $6 / $89 |
| Low-income taxpayer (income at or below 250% of federal poverty) | $43 or waived |
Fees checked September 15, 2026 against the IRS payment-plan fee schedule. Changes to existing direct-debit agreements have no revision fee. Low-income direct-debit setup fees are waived; other qualifying low-income fees may be reimbursed. Interest remains separate and continues to accrue.
IRS payment plan interest rate
IRS Payment Plan Interest Rate and Penalties
Interest and penalties keep running while you pay. A plan slows how fast they grow but does not stop them.
7%
Interest, Fourth Quarter 2026
The underpayment rate per year, compounded daily, for October 1 through December 31, 2026. A payment plan does not lower it, and the IRS resets it every quarter.
0.25%
Failure-to-Pay Penalty on a Plan
Per month during an installment agreement, down from 0.5%, if you filed your return on time.
25%
Penalty Cap
The failure-to-pay penalty stops at 25% of the unpaid tax. It rises to 1% a month after a notice of intent to levy goes unpaid.
The reduced 0.25% rate applies only if the return was filed on time. Sources: the IRS failure-to-pay penalty page and its fourth quarter 2026 interest rate notice.
Applying
How to Apply for an IRS Payment Plan
There are three application paths depending on how much you owe and how complex your situation is.
Online: OPA
Individuals owing $50,000 or less with all required returns filed may apply through the IRS Online Payment Agreement tool at irs.gov/opa. Eligibility and the repayment terms depend on your account.
Setup fee: $29 (direct debit) or $69 (other).
By Mail: Form 9465
File Form 9465 (Installment Agreement Request) with your tax return or separately. Include Form 433-F (Collection Information Statement) when required by the instructions to disclose income, assets, and expenses.
Setup fee: $107 (direct debit) or $178 (other).
With Representation
For balances over $50,000, payroll tax debt, an active levy, an assigned Revenue Officer, or unfiled returns, professional representation is worth it. We file Power of Attorney on day one and handle the agreement end to end.
Free consultation. Talk to a specialist.
Discreet help
You Don't Have to Explain How It Happened
Owing the IRS can feel like something to hide. Plenty of the people who call us haven't told anyone, and some stopped opening the mail a while ago. That's far more common than it feels, and it's nothing we judge.
Your consultation is free and confidential. Once you hire us and Power of Attorney is on file, the IRS deals with us, so the calls and the back-and-forth stop landing on you.
How We Keep It Discreet
- A free, confidential first conversation
- No judgment about how it happened
- Once Power of Attorney is filed, the IRS contacts us
- Phone, secure document portal, and video, with no office visit
What happens if you default
Default, Reinstatement, and Collection
An IRS payment plan can default for three main reasons: you miss a monthly payment, fail to file a required return on time, or add new unpaid taxes. A CP523 notice tells you the IRS intends to terminate the agreement and take collection action if the problem is not resolved.
Contact the IRS as soon as possible, and no later than 30 days from the notice date. Read the notice for the reason, termination date, and correction or appeal instructions. If you do nothing, the agreement can end and collection action can resume, subject to applicable notice and appeal protections.
Ask whether the agreement can be reinstated and what fee applies to your request. Approval depends on the reason for default and your current finances. Even if you already corrected the problem, contact the IRS to confirm its records. The IRS CP523 guidance explains the next steps.
If you get a CP523
- Read the noticeThe date, the reason for the default, and the termination date.
- Call within 30 daysContact the IRS no later than 30 days from the notice date.
- Ask about reinstatementWhether the agreement can be reinstated and what fee applies.
Alternatives
If a Payment Plan Is Not the Right Answer
An installment agreement is the most common IRS resolution but not always the best one. The IRS publishes other programs that may fit better depending on your numbers.
Offer in Compromise (OIC)
Settle the tax debt for less than the full balance. Eligibility uses IRS formulas based on your income, assets, and allowable expenses. It can provide significant relief when approved; preparing the application takes care.
OIC service →Currently Not Collectible (CNC)
For taxpayers whose income barely covers basic living expenses. Collection pauses entirely. Debt does not go away but no garnishments or levies. Reviewed periodically.
All relief options →File Missing Returns First
The IRS will not approve any installment agreement if you have unfiled returns. If you owe back taxes for years you never filed, the first step is filing those returns.
Back taxes →Active IRS Wage Garnishment?
If the IRS is already taking part of your paycheck, an installment agreement whose terms do not allow the levy to continue is one of the grounds for a release. The order of the filings matters.
IRS wage garnishment help →† Internal company figures through 2026. Tax debt addressed on behalf of clients. Individual results vary by case and IRS or state agency review.
Federal programs
The Full Set of IRS Resolution Programs We Work With
Installment agreements are one of nine federal programs ITR handles. The right resolution for your case depends on the math.
Frequently asked
IRS Payment Plan FAQ
The most common questions we hear about IRS installment agreements.
Is an IRS Payment Plan the Same as an IRS Installment Agreement?
How Do I Apply for an IRS Payment Plan?
How Much Does an IRS Payment Plan Cost?
What Is the IRS Payment Plan Interest Rate?
What Are IRS Simple Payment Plans?
Will an IRS Payment Plan Stop Wage Garnishment or a Bank Levy?
What If I Cannot Afford Even the Minimum Monthly Payment?
Can the IRS Deny My Payment Plan Request?
What Happens If I Default on an IRS Payment Plan?
Does an IRS Payment Plan Affect My Credit?
Should I Hire a Tax Professional to Set up My IRS Payment Plan?
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Straight From the IRS
Sources: IRS publications, forms and pages that set these rules.
These links open in a new tab.
- IRS: Payment plans and installment agreementsPlan types, current setup fees, and who qualifies for each.
- IRS: Simple Payment Plans for individuals and businessesCurrent balance limits, filing and payment requirements, and terms tied to the collection deadline.
- Internal Revenue Manual 5.14.5: Simple Payment Plans and guaranteed installment agreementsDetailed IRS rules for individual, business trust fund, and guaranteed payment agreements.
- IRS Tax Topic 202: Tax payment optionsShort-term plans, Simple Payment Plans, guaranteed and partial payment agreements, and direct debit.
- IRS Online Payment Agreement applicationThe IRS application. Which terms you qualify for depends on what your financials support.
- Form 9465: Installment Agreement RequestRequest an installment agreement when you do not use the online application.
- Form 433-F: Collection Information StatementThe shorter financial statement used for many payment plans.
- IRS: Failure to pay penaltyThe 0.5% monthly rate, the 0.25% rate during an approved payment plan, and the 25% cap.
- IRS: Interest rates for the fourth quarter of 2026The underpayment interest rate for October 1 through December 31, 2026.
- IRS: Understanding your CP523 noticeWhat the default notice means, the 30-day deadline, and how to ask for reinstatement or an appeal.
Links verified2026-08-26. irs.gov · taxpayeradvocate.irs.gov