IRS Payment Plan Terms

Setting up a payment plan to pay the Internal Revenue Service may be your best option.

For taxpayers who do not have the money to pay their tax in full, the Internal Revenue Service (IRS) offers a monthly payment plan that allows taxpayers to make monthly payments until the back tax is paid in full. However, there are a few things to keep mind before you decide whether it's the right option for you.

Initiation

As long as you owe less than $25,000, the IRS offers three simple ways to set up your payment plan. You can use Online Payment Agreement Application found on the IRS website, mail in Form 9465 or call the IRS at 800-829-1040 between the hours of 7 a.m. and 10 p.m across all time zones.

Fees

The fee to initiate an installment agreement with the IRS is $105. If you agree to have the IRS directly debit the payment from your bank, then the fee is reduced to $52.

Payment Methods

You can mail your monthly payment to the IRS office which accepts payments in your area, allow the payments to be directly debited from your checking account, allow your employer to make deductions from your payroll check or pay online using the Electronic Federal Tax Payment System (EFTPS.gov).

Interest

Interest continues to accrue even after your payment plan is set up.

References

• IRS.gov: What Is the Best Way to Make Timely Installment Payments?
• IRS.gov: Online Payment Agreement Application
• IRS.gov: Payment Plans, Installment Agreements

Resources

• IRS.gov: Form 9465