IRS Income Tax Payment Plans
Important: Most taxpayers do not know that IRS tax penalties for not filing a tax return are higher than the penalties for not paying taxes: estimate your potential tax penalties.
Where to Begin when Making a Payment Plan
Start and File your 2020 Tax Return first. Once your return is accepted by the IRS and you don't have the funds to pay your taxes immediately, you should look at the tax payment plans listed below. These plans enable you to work with the IRS to pay your tax debt over time rather than all at once. If you owe taxes for a previous year, see back taxes or previous tax year return forms.
When it comes to paying IRS taxes and/or state taxes, there are essentially three scenarios:
1. Ready to Pay Now. A taxpayer has the funds required or is okay with paying taxes by direct payment or debit/credit card now.
2. Not Ready to Pay Now but Over Time: A taxpayer does not have the funds to pay taxes on time, but does want to pay over time. On this page, you will find payment plan options for this scenario.
3. Not Paying Now or Overtime; does not Want to Pay Taxes for any Reason: A taxpayer who does or does not have the funds now, but does not want to pay taxes now nor over time via a payment plan. In this case, the IRS might have already or might will issue a tax levy or wage garnishment against tax debt.
How to Enroll in an IRS Payment Plan
Your individual IRS income tax situation and future income prospects will determine which of the below tax payment plans are available to you. Important: If you have not filed your current year tax return or back taxes, do this as soon as possible as the late filing penalties and interest fees are generally higher than the late payment penalties and interest fees. Use the eFile.com PENALTYucator for more tax penalty details.
See how to sign into your existing IRS Account which may require an IP-PIN.
In the table below, find the different payment plants accompanied by a description of each as well as brief instructions and recommendations.
If you cannot pay all your taxes on time, you may apply for a long or short-term payment extension with the IRS via an Online Payment Agreement or OPA. The short-term plan allows you to repay your taxes within 120 days. You may qualify online for a short-term payment plan if you are an individual taxpayer who owes $100,000 or less in combined taxes, penalties, and interest. If you require more time, you can apply for a long-term plan or installment agreement, which you can be granted if you owe $50,000 or less and want to repay in more than 120 days - see below. Keep in mind that setup fees for a plan might be higher if you apply for a tax payment plan by phone at 1-800-829-1040, via mail, or in-person.
We recommend you apply online because you will receive immediate notification of whether your payment plan has been approved or not by the IRS. If the IRS approves your payment plan, you may be subject to the fees listed on the IRS page for repayment plans. For just applying, these fees are as little as $0 for short-term and $31 or more for long-term, plus accplicable fees if paying by card. If approved, you can use the Online Payment Agreement tool on your IRS account
to make the following changes: adjust monthly payment amount, change monthly payment due date, convert existing agreement to a Direct Debit agreement, and reinstate after default.
Should you not be able to pay your income taxes in full immediately or within 120 days, you may qualify for a monthly plan, including the long-term installment plan
. You would pay taxes owed in more than 120 days with monthly payments. Use the Online Payment Agreement site to apply online if you have filed your return already for an installment plan. Otherwise, apply by phone at 1-800-829-1040 or mail Form 9465
if you have not filed a return yet - FileIT
. For a long-term payment plan, the online setup fee is $149. The phone, mail, or in-person setup fee is $225. Low income taxpayers pay less in setup fees. See if you qualify for a fee reduction by applying for the low-income certificate via the Form 13844
. Accrued penalties and interest payments apply until the tax balance is paid in full.
Once you start the application process, you will see more detailed information about both plans: Full Payment
and Installment Agreements
. Your personal tax and future income situation will play an important role in deciding which plan to select. Each of these payment plans will offer these options: direct debit or Electronic Federal Tax Payment System®, or EFTPS, from your bank account, or payroll deduction from your employer - submit Form 2159, Payroll Deduction Agreement
. You should be current on all filing requirements before you select a payment plan.
If for some reason you can't pay your taxes via the two plans mentioned above, you may propose a partial payment installment agreement or PPIA. The PPIA is between you as the taxpayer and the IRS, providing for less than the full payment of the tax liability by the expiration of the collection period. Read your rights as a taxpayer
before you call 1-800-829-1040.
Recommended if the taxpayer is struggling to find a plan that allows them to pay in full. This agreement will allow the taxpayer to pay for a smaller amount over time. See Offer in Compromise below for a similar option and decide which is best for you.
The Officer in Compromise Agreement, OIC, is a settlement between you as the taxpayer and the IRS that resolves your tax liability by payment of an agreed upon reduced amount. You have these options with an OIC:Lump Sum Payment:
The full debt must be paid in 5 or fewer installments,Short-Term Periodic Payment:
The debt must be paid within 24 months, orDeferred Periodic Payment:
The debt may be paid in more than 24 months, but must be paid within the 10-year statutory period which the IRS has to collect the debt.
Pre-requisite is for you to have filed all tax returns. Taxpayers in an open bankruptcy proceeding
aren't eligible to enter into an OIC. Use this Pre-Qualifier online OIC tool
to verify if you might be eligible for the Offer in Compromise Agreement. Use Form 656 Booklet and Form 433-A
: Form 656 for a step-by-step guide to apply for the OIC agreement; Form 433-A and all required documentation as specified on the forms and Form 656(s) - FileIT these forms
. The non-refundable application fee is $205 and initial non-refundable payment Form 656, unless you qualify for the low-income via the Form form-13844
- or submit a Doubt as to Liability offer.
If you are unable to pay any tax amount due as it would prevent you from paying for your basic living expenses, you can request a delay of tax collection until you're able to pay. If the IRS agrees with your request that you can't pay any of your tax debt because of financial hardship, they may temporarily delay tax payment collection if your Form 1127 Application
is granted by reporting your IRS tax account as currently not collectible until your financial condition improves in the future - FileIT
. If approved, it does not mean your tax debt will be canceled or go away
. Late tax payment penalties and interest would continue to accrue until you have paid your tax debt in full. The IRS will most likely ask you to submit a Collection Information Sheet via Form 433f, 433a and/or 433b
. The IRS might still file a Notice of Federal Tax Lien.
Do not ignore any notice from the IRS; seek professional advice before you respond if needed, but respond in due time. If you don't have the funds to pay your tax liability in full or make an alternative payment arrangement as outline above, the IRS might take tax collection action. Have all your financial information available, such as pay stubs, lease or rental agreements, mortgage statements, or car lease/loan. Read your rights as a taxpayer
before you call 1-800-829-1040.
General Payment Plan Consideration
File your 2020 Tax Return
even if you cannot pay your taxes on time as the late filing
penalties and interest fees are higher than the late tax payment
interest and penalty fees in most cases.Use the eFile.com PENALTYucator
for more tax penalty details. Last but not least, do not ignore overdue tax payments and tackle the task to work out a payment plan as you may face a wage garnishment or levy and/or a tax lien.
When you prepare and e-file with eFile.com, you gain access to different ways to pay onsite. Learn how to balance your tax withholding via Form W-4 and keep more of your hard-earned money each tax year. This will help if you are concerned you may owe money on your 2020 Tax Return.
Begin preparing your taxes now; gather all your forms and statements, locate your previous tax forms or past Adjusted Gross Income, learn ways to save on taxes during the year, and find different money-saving methods on everyday expenses.
Additional questions on paying your payment plans? Contact one of our Taxperts.
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