IRS Payment Plans

An IRS payment plan helps taxpayers who need to file back taxes with the federal government and pay back the amount they owe over a period of time without the threat of increased collection actions. The IRS allows several types of IRS tax payment plans, including an automatic installment agreement plan. Other types of IRS Payment Agreement plans include partial-pay installment agreements, streamlined installment agreements, offer in compromise resolutions, and stair-step installment agreements.

IRS Tax Payment Plan

Types of IRS Payment Plans

Selecting the IRS payment plan that best suits your needs depends on your owed tax amount, your financials, and more. IRS tax payment plans are divided into two general categories: short-term and long-term payment plans.

Short-term IRS Payment Plan

A short-term payment plan allows the taxpayer to pay off IRS liability in 120 days or less. It is available to taxpayers who owe $100,000 or less. Regular payments can be made via automatic withdrawal, check, money order, or debit or credit card.

Long-term IRS Payment Plans

Any payment plan over 120 days is considered a long-term payment plan. There are many different types of short-term IRS payment plans, each suited to a specific liability amount and payment terms.

Those who owe $10,000 or below will automatically qualify for a long-term tax payment, which gives the taxpayer 36 months to pay off their liability. In order to qualify for a guaranteed installment agreement, a taxpayer must:

  • Owe $10,000 or less in tax liability before any additional penalties or taxes
  • Have a history of both filing and paying taxes on time over the prior 5 years
  • Not have a history of installment agreements over the prior 5 years
  • Be unable to currently pay the entire tax amount
  • Agree to pay the entire tax amount, plus penalties and interest, over the course of the next 3 years
  • Agree to pay all installment payments on-time
  • Agree to file and pay all future taxes on time

If any of the above criteria are not met, the IRS may reject your request for a guaranteed installment agreement. Furthermore, if payments are not paid on time, the IRS may immediately terminate your guaranteed installment agreement.

If a guaranteed installment agreement is enacted, there may or may not be a lien that is placed against you. It is up to the discretion of the person who has approved your installment agreement.

You may request a guaranteed installment agreement with the IRS online, via mail, or by phone.

If your liability amount is between $10,000 and $25,000, you may qualify for a streamlined installment agreement with the IRS. This federal tax payment plan is paid over the course of 72 months. Just like guaranteed payment plans, streamlined payment plans do not require the verification of your financials in order to qualify. To qualify, you must:

  • Owe less than $25,000 in combined tax liability, interest, and penalties.
  • Be up to date on all past tax returns; any unfiled returns must be filed before proceeding
  • Not have a history of installment agreements over the past 5 years
  • Not be filing for bankruptcy

If you do qualify for a streamlined payment plan, you’ll need to pay off your liability in installments over the course of 6 years. Again, a lien may be placed against you according to the discretion of your IRS representative.

Once you’ve verified you meet the above requirements, you can apply for a streamlined installment agreement online, via mail, or by phone, using the above instructions. All streamlined installment agreements include a setup fee according to the method through which they are applied for, as well as the payment method.

If you owe more than $50,000 in combined tax, you’ll need to submit Form 9465 and Form 433-F. You’ll need to list your lines of credit, accounts, real estate, and any other assets, and provide details on your employment, monthly income, and living expenses.

This application cannot be done online. If you have an outstanding balance that is more than this amount and are unable to make the minimum required payment amount for your installments, you may need to fill out Form 433-B, Collection Information Statement for Businesses. In this situation, it’s highly recommended to contact a tax expert in order to work out a deal with the Internal Revenue Service before facing severe penalties.

If the company of which you are the sole proprietor is struggling, and you owe an outstanding balance to the IRS, a tax payment plan for small businesses may be a good option to pursue. Any business that owes $25,000 or less in back taxes can request what’s called an In-Business Trust Fund Express installment agreement. While this type of IRS tax payment plan doesn’t require a financial statement, your business must currently have employees on its roster. This installment agreement gives businesses a 24-month period to fully pay the outstanding balance over time. If the amount owed is less than $25,000 but more than $10,000 in combined tax, the business must set up a Direct Debit installment agreement. Businesses may apply online or over the phone.

IRS Installment Agreement Fees

Before proposing a payment plan, understand that there are fees to enter into a payment agreement with the IRS that can cost up to $120.

Additionally, if an installment agreement or plan for payment has failed due to default, and you’re looking to reinstate the same plan, you may incur an additional reinstatement fee, depending on your financial situation.

 Type of Payment Plan Fees
 Regular installment agreement $225
 Regular direct debit installment agreement $107
 Online payment agreement $149
 Direct debit online payment agreement $31
 Restructured or reinstated installment agreement $89

Source: IRS.gov

Ready for a Payment Plan?

How Does A Payment Plan Proposal Work?

Your request will begin with a Collection Information statement found on Form 433-A. An IRS collector will analyze your information to determine what amount you can pay per installment. These payment amounts are done at the discretion of the Internal Revenue Service.

When proposing a payment plan, offer to pay the amount of your income minus your necessary living expenses. This will be the cash you have left over after your life necessity costs. It’s unwise to propose a payment plan you can’t afford just to better your chances of approval. Once approved, you won’t be able to renegotiate, so make sure it’s a payment plan you can feasibly handle on your current wages.

When you propose the agreement, make the first payment concurrently. Continue to make these monthly payments by using payment slips and bar-coded envelopes provided in any notice you may have received, even if the IRS hasn’t yet approved your IRS tax installment plan. Collectors are more willing to work with taxpayers that make voluntary payments. You can make payments online, over the phone, through check or money order, and with a credit card. However you pay, it’s important to always do so without defaulting.

After your installment agreement proposal has been approved, you can pay through other specific options.

  • Direct Debit: You can ask your bank to make automatic payments from your checking account every month and send the payment to the IRS for you, using your account and bank routing numbers. So long as the bank routing information is correct, and the account is open and funded, your payment won’t be late or missed—better ensuring your installment agreement is never revoked.
  • Direct Payroll Deduction: You may also request a payroll deduction using Form 219, the Payroll Deduction Agreement. This asks your employer to send payments to the IRS every month using payment slips.
  • Online Payment Agreement: Using the online payment agreement tool on the IRS website, you can apply for your installments online. An online payment plan is an option for most installment agreements for qualified taxpayers and can be a fast and easy way of ensuring your payment reaches the IRS in a timely manner. You, or your representative granted power of attorney, may submit an online application. Learn more about online payment plans on the Community Tax blog.

IRS Payment Plan FAQs

Can You Negotiate Back Taxes with the IRS?

If you owe more than $50,000, or you can’t reasonably pay the outstanding balance owed in less than six years, it’s important to come up with a payment plan that the IRS will approve. The team of experts here at Community Tax can help you devise a solid IRS installment payment plan you’ll be able to realistically live with, and whether it would be a short-term or long-term payment plan.

There are numerous collection methods and consequences you can expect if you continue to let your tax owed go unpaid:

  • Federal Tax Lien: If the government places a tax lien on your property or assets, they’re laying claim to your personal property. A lien doesn’t involve actual seizure, but it’s the step immediately prior to the IRS taking action. A lien will generally be issued only if you owed more than $10,000 in back taxes.
  • Federal Tax Levy: If lien notices go ignored, the government will seize your property. This could mean wage garnishment, bank account seizure, or the selling of your possessions.

If you realize that you cannot feasibly pay back the total tax owed to the government, you may choose to pursue an Offer in Compromise. This is a settlement with the IRS to pay less than you owe. These can be extremely difficult to qualify, and it’s important to use the help of a tax expert to ensure the best chance of approval.

These can also take up to 12 months to process, and you’ll need to be making payments during the interim period. The IRS won’t consider an Offer in Compromise from a taxpayer who hasn’t been taking steps to start paying off what they owe.

Always file your tax return for the current tax period, even if you cannot afford to pay your outstanding balance from past tax periods. The IRS will enforce a failure to file penalty that must be paid in addition to your back taxes. Currently the penalty is .5% per month, which can increase to a maximum of 25% of your tax bill. The IRS also offers the Fresh Start Initiative, which can waive the failure to file penalty waived for up to six months.

Many taxpayers find it easiest to pay their tax bill—or at least part of their required payment—with a credit card. The IRS accepts credit card payments through three companies: Link2Gov, WorldPay, and Official Payments. These payment processors charge a convenience fee of about 2% of your total bill balance.

While this can get the taxpayer out of hot water with the Internal Revenue Service, it may come with other consequences and costs; each credit card company will enforce its own fee schedule. If you do end up paying any convenience or setup fees, keep a record of them. The IRS allows taxpayers to claim these amounts as a miscellaneous itemized expense.

Keep in mind that paying by credit card can also result in interest, but many taxpayers find that credit card payments have lower interest rates and fewer penalties than IRS tax payment plans do.

If your tax owed is much too large for credit card payments, the IRS will take monthly payments. A tax expert can help you determine which repayment plan best suits your financial situation.

There are three reasons the IRS might reject a proposed installment payment plan:

  • Unnecessary Living Expenses: If the IRS deems your living expenses extravagant, they will deny your payment plan proposal. Whether it be charitable contributions or large credit card payments, should the IRS balk at your living expenditures, they’ll likely refuse your offer.
  • Your Collection Information Statement is Incorrect: If the information provided on your Form 433-A, or Collection Information Statement, is untruthful or incomplete, the IRS may assume you’re hiding income or property.
  • You’ve Defaulted on a Previous Installment Agreement: If your payment history shows that you have already defaulted on a prior installment plan, the IRS may be hesitant to accept your new proposal.

If your installment agreement is rejected, you can negotiate again. If you haven’t already, speak with a tax accountant that can help you revise and prepare your next payment plan proposal to assure better chances of success.

There are cases in which the IRS may revoke a taxpayer’s installment agreement. While you and the IRS are both bound by the agreement’s terms, should any of the following be true, the IRS may revoke the payment plan:

  • Missed Payments: Should you not make your payments on time and in full, the IRS may revoke your installment agreement immediately. Generally, the Internal Revenue Service will wait anywhere from 30 to 60 days before revoking the payment plan and usually give you a warning or chance to reinstate the agreement by paying the outstanding balance for that monthly payment.
  • You Fail to File or Pay Taxes after the Installment Agreement: If the IRS discovers you’ve knowingly provided incomplete or inaccurate information as part of the negotiation, they will revoke your installment agreement.
  • You Omitted or Misreported Information: If the IRS discovers you’ve knowingly provided incomplete or inaccurate information as part of the negotiation, they will revoke your installment agreement.

What Our Clients Say

Lisa L.

Community Tax, from the very 1st interaction, has been nothing but kind, interested, and professional in dealing with my nightmare tax situation.

in Accounts Receivable, has assisted with finding the best payment amount to pay for the Community Tax and has gone out of his way to help resolve any payment issues I may have encountered. Case advocate, is my customer support Jewel! She is so invested in my case, does follow-up, follow through, and is soo easy to communicate with Esquire/Tax Practitioner negotiated a settlement to resolve this tax nightmare that was so amazing, I don’t believe it is real. It has lifted heavy weight off of my soul and psyche. The team at Community Tax has helped me overcome the shame of my situation and helped me to formulate a plan to achieve resolution and get back on track! The rest is up to me.

Alejandro V.

Excelente trabajo el equipo de Edgar B. me ayudo a poder establecer un plan de pagos y tener un resolución.

Michael R.

My initial contact with Community Tax was with Steven R. We had bought and sold a delivery route contracted with Fedex Ground.

We filed all our 940 and 941 business forms. We were in business for 5 years and sold our business for a profit in 2018. In 2020 we started receiving IRS statements for late fees that totaled 8853 dollars.

I called and spoke with Steve. I paid 500 processing fee and Steve processed us and reported that we were in good standing with the IRS. He told me it was a large enough sum for the IRS and if we agreed to pay 30 a month we would be protected and Community tax would take care of this. We signed up and instead of paying the IRS 8853 we received a refund around 2100.

And since then we had the pleasure of working with Gabriella. Dennis worked with us last year. We sold our income property in California and I worked with Dennis and we were able to get additional write offs and paid off the IRS.

And we worked with Larry. And he advised me on working out a payment agreement with the state of California. We owe 16k. And we agreed to pay 270 a month for 5 years.

We invested our capital gain in a retirement plan and the interest income and SSA benefits and small pensions my wife and I live comfortably in retirement.

I want to say thank you. Great customer service. And old fashioned one on one consultation. We are happy customers.

What Our Clients Say

Lisa L.

Community Tax, from the very 1st interaction, has been nothing but kind, interested, and professional in dealing with my nightmare tax situation.

in Accounts Receivable, has assisted with finding the best payment amount to pay for the Community Tax and has gone out of his way to help resolve any payment issues I may have encountered. Case advocate, is my customer support Jewel! She is so invested in my case, does follow-up, follow through, and is soo easy to communicate with Esquire/Tax Practitioner negotiated a settlement to resolve this tax nightmare that was so amazing, I don’t believe it is real. It has lifted heavy weight off of my soul and psyche. The team at Community Tax has helped me overcome the shame of my situation and helped me to formulate a plan to achieve resolution and get back on track! The rest is up to me.

Alejandro V.

Excelente trabajo el equipo de Edgar B. me ayudo a poder establecer un plan de pagos y tener un resolución.

Michael R.

My initial contact with Community Tax was with Steven R. We had bought and sold a delivery route contracted with Fedex Ground.

We filed all our 940 and 941 business forms. We were in business for 5 years and sold our business for a profit in 2018. In 2020 we started receiving IRS statements for late fees that totaled 8853 dollars.

I called and spoke with Steve. I paid 500 processing fee and Steve processed us and reported that we were in good standing with the IRS. He told me it was a large enough sum for the IRS and if we agreed to pay 30 a month we would be protected and Community tax would take care of this. We signed up and instead of paying the IRS 8853 we received a refund around 2100.

And since then we had the pleasure of working with Gabriella. Dennis worked with us last year. We sold our income property in California and I worked with Dennis and we were able to get additional write offs and paid off the IRS.

And we worked with Larry. And he advised me on working out a payment agreement with the state of California. We owe 16k. And we agreed to pay 270 a month for 5 years.

We invested our capital gain in a retirement plan and the interest income and SSA benefits and small pensions my wife and I live comfortably in retirement.

I want to say thank you. Great customer service. And old fashioned one on one consultation. We are happy customers.

Community Tax Help Set Up Your IRS Payment Plan

Community Tax professionals assist taxpayers with identifying the correct IRS tax payment plan based on their individual circumstances. The professionals at Community Tax have experience working with taxpayers across the United States and have the knowledge of how differing locations can impact how the IRS views an individual’s tax situation.

If you need an IRS tax payment plan, Community Tax will help you save time, money, and stress. Our team can help you understand your current plan, fill out an IRS tax short-term payment plan form, check a pre-existing IRS tax payment plan balance,, and pay off what you owe to the government quickly and efficiently.

Our tax attorneys, enrolled agents, and CPAs will work together and with the IRS to negotiate the best possible IRS payment agreement for you personally. Call us for more information about our program and how you can get out of tax trouble today at 1-888-676-4128.

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