IRS Payment Plans: Short-Term Relief and Installment Options

Use this step-by-step guide to see if you qualify for an IRS payment plan, choose the right option, and avoid common mistakes. A payment plan (installment agreement) lets you pay your federal taxes over time instead of all at once. You must file all required tax returns first. Interest and late-payment penalties still apply until the full balance is paid.

Quick Eligibility Check: Do You Qualify Right Now?

You likely qualify for a short-term payment plan if:
– You can pay the full amount in 180 days or less under the IRS Taxpayer Relief Initiative (normally 120 days).
– Your total balance (tax, penalties, and interest) is under $100,000 if applying online.
– You’ve filed all required returns.

You likely qualify for a long-term installment agreement if:
– You cannot pay in full within 120–180 days.
– You can make monthly payments and finish within the IRS collection period (usually up to 10 years).
– You’ve filed all required returns.
– Your assessed balance is $50,000 or less for a streamlined plan (special rules apply for $25,000 or less vs. $25,001–$50,000).
– You owe $10,000 or less in tax (excluding penalties and interest) and meet the guaranteed installment agreement rules.

You likely do not qualify today if:
– You have unfiled tax returns.
– You can pay the full amount now (then a short-term option—or full payment—is better).
– You need more than the collection period to finish payments and do not qualify for partial payment terms.

According to analysis by VisaVerge.com, many taxpayers who file on time and keep up with new taxes are more likely to get flexible terms approved.

Short-Term Payment Plan: 180 Days Under Current Relief

Who it fits:
– You can pay the full tax, interest, and penalties within 180 days (this Relief extended the normal 120-day limit).
– You want to avoid the setup fee that applies to long-term installment agreements.

Key points:
– Apply online through the IRS Online Payment Agreement system or call 800-829-1040.
– Online requests allowed if your combined balance is under $100,000.
– Payment methods:
– Direct Pay (from your bank)
– EFTPS (enrollment required)
– Check or money order
– Debit/credit card (card fees apply)
– No user fee applies for short-term plans.
– Do not file Form 9465 if you can pay in 180 days.

Note: Under the Taxpayer Relief Initiative, the short-term period is 180 days. The IRS has not specified when this relief will end.

Long-Term Payment Plan (Installment Agreement): Monthly Payments

Who it fits:
– You can’t pay in full within 120–180 days.
– You can make steady monthly payments.
– Most plans run up to 72 months, but all payments must finish before the IRS collection period ends (usually up to 10 years from assessment).

How to request:
1. File Form 9465 Installment Agreement Request — see About Form 9465.
2. You may attach it to your return or mail it if you already filed.
3. In many cases you can apply online through the IRS system instead of filing the form.

If approved:
– The IRS sends the agreement terms and bills a user fee (lower if you apply online).

Your promises under the plan:
– Make payments on time every month.
– Stay current on all future taxes (enough withholding or estimated payments so you don’t build a new balance).
– Any refund will be applied to your debt, but you still must make your regular monthly payment.

Important: An installment agreement is not valid unless the IRS accepts it.

Guaranteed Installment Agreement (For Smaller Tax Debts)

The IRS must accept your proposal if all are true:
– You owe $10,000 or less in tax (excluding penalties and interest).
– You filed and paid on time for the past five years and had no installment agreement in those years.
– You agree to pay in full within three years or before the collection period ends, whichever comes first.
– You agree to file and pay on time while the agreement is active.
– You can’t pay the full amount now.

Note: You can still qualify even if penalties and interest push your overall balance above $10,000, provided the tax alone is $10,000 or less.

Streamlined Installment Agreements (Up to $50,000)

If your assessed balance (tax + assessed penalties + interest) is $50,000 or less, you may qualify for easier approval without full financial verification.

Tiers:
– Up to $25,000: No financial statement required.
– $25,001 to $50,000: You must either:
– Agree to automatic payments (Direct Debit or payroll deduction), or
– Provide a financial statement.

If your balance is slightly above $50,000, you can pay it down to $50,000 or less before applying to access streamlined terms.

• Maximum term is 72 months or before the collection period ends, whichever is earlier.

Non-Streamlined Agreements (Over $50,000 or More Than Six Years Needed)

If you owe more than $50,000 or need more than six years to pay:
– You must complete Form 433-F Collection Information Statement — see About Form 433-F.
– Attach it to a paper-filed Form 9465.
– This is a non-streamlined agreement and requires detailed financial disclosure.
– The maximum payment term must end before the collection statute expires (generally up to 120 months).

The IRS uses Form 433 data to review income, expenses, assets, and debts and decide what you can reasonably pay.

Required Forms and Setup Methods

Common forms:
– Form 9465 Installment Agreement Request: About Form 9465
– Form 433-F Collection Information Statement: About Form 433-F
– Form 433-D Installment Agreement (for Direct Debit agreements): About Form 433-D
– Form 2159 Payroll Deduction Agreement (for payroll deduction plans): About Form 2159

Payment methods:
– Direct Debit (DDIA) from your bank — preferred for easier approval at higher balances.
– Direct Pay from your bank each month.
– EFTPS monthly payments (enrollment required).
– Check or money order.
– Debit/credit card (card fees apply).
– Payroll deduction requires Form 2159 and your employer’s approval; you must paper-file Form 9465 with it.

User Fees for Long-Term Plans (Effective July 1, 2024)

• Direct Debit (DDIA):
  • $22 if you apply online
  • $107 by phone, mail, or in person
  • Fee waived for low-income applicants
• Non-Direct Debit:
  • $69 if you apply online
  • $178 by phone, mail, or in person
  • $43 for low-income applicants (may be reimbursed if conditions are met)

Low-income rule:
– If your adjusted gross income is at or below 250% of the federal poverty level, fees are waived for DDIA or reduced/reimbursed for non-DDIA.
– If you can’t use DDIA, the IRS may reimburse your fee after you complete the agreement.

COVID-Era Taxpayer Relief Initiative: Extra Flexibility

Key provisions (IR-2020-248) that remain helpful:
– Short-term plans extended to 180 days.
– The IRS may automatically add certain new tax year balances to existing installment agreements for individuals and out-of-business entities.
– For some cases under $250,000 and not yet assigned to a revenue officer, you may set up a non-streamlined installment agreement without submitting financial documents if your proposed monthly payment is sufficient.
– Some people who only owe for the 2019 tax year and owe under $250,000 may qualify to set up an agreement without a federal tax lien.
– You can use the online system to propose a lower monthly amount or change your due date if you have an existing Direct Debit plan.

Note: The IRS has not said when this relief will expire.

For official details and to apply online, see the IRS Online Payment Agreement page: https://www.irs.gov/payments/online-payment-agreement-application.

Disqualifying Factors and Common Pitfalls

You may be denied or default if:
– You haven’t filed all required returns.
– You miss payments or don’t stay current on new-year taxes.
– Your proposal won’t pay off the balance within the collection period and you don’t qualify for partial payment terms.
– You try to set up payroll deduction without employer approval.
– You don’t respond when the IRS requests forms or proof for a non-streamlined plan.

If a plan defaults:
– The IRS will usually accept a new request if you can’t pay in full, but a new user fee applies.
– While a change request is pending, you must keep paying under the current plan.

Alternatives if You Don’t Qualify Today

Consider these options:
– Short-term plan (up to 180 days) if you can finish within that time.
– Pay down your balance below a key threshold (for example, under $50,000) to qualify for a streamlined agreement.
– Switch to Direct Debit to meet streamlined rules for balances between $25,001 and $50,000.
– Consider a partial payment installment agreement if you can’t pay in full before the collection period ends (this requires a financial review).
– If your case involves severe hardship, consult a qualified tax professional about other IRS options outside a standard installment agreement.

How to Improve Your Chances

• File every return on time, even if you can’t pay in full.
• Pay as much as you can with the return to cut interest and penalties.
• Choose Direct Debit for stronger approval odds and lower fees.
• Keep up with current-year taxes so you don’t add new balances.
• If your balance is near a threshold (like $50,000), make a one-time payment to bring it below that level before applying.
• For payroll deduction, complete Form 2159 fully and get employer sign-off before mailing it with Form 9465.

For many families in the United States 🇺🇸—including immigrants who file and pay federal taxes—an IRS payment plan can protect savings while staying on the right side of the law. The steps above help you see where you stand and what to do next.