Setting up a monthly payment plan with the Internal Revenue Service is fairly easy. Either you or your tax professional can set up an installment agreement quickly either over the phone, by filling out some paperwork, or by using the Online Payment Agreement web application.
It's important to know that there are four basic types of installment agreements. You should review which installment agreement the IRS might approve for your situation, and pick the one that best fits your budget and other financial constraints.
Time Required: 2 hours
- Find out how much you owe in unpaid taxes. Call the IRS or get out copies of your tax returns to verify the amount you owe. The amount you owe includes your original tax due, plus penalties and interest.
- Be aware that the IRS charges an user fee to set up a payment plan: $52 for direct debit installment agreements, $120 for new installment agreements without direct debit, or $50 for restructuring or for reinstating a defaulted installment agreement. Low income taxpayers can request a lower fee of $43.
- Fill out Form 9465, Installment Agreement Request. Or use the Online Payment Agreement Application on the IRS Web site to set up a payment plan.
- Choose a day of the month you want to make your payments. You must make your payment by the same day each and every month. You can choose any day you want between the 1st and 28th of the month.
- Choose your monthly payment amount. You must pay at least this amount each and every month. You can always pay more, but you should write down the minimum you are willing to pay each month.
- The IRS will respond to your request in about 30 days.
- Make payments each and every month. You can pay by check, money order, credit card, EFTPS or automatic withdrawals from your checking account.
- You can request an installment agreement over the phone. Simply call the IRS at 1-800-829-1040. They will set up a payment plan over the phone and send you some paperwork to fill out.
- The IRS must agree to accept your installment agreement if you meet certain criteria: your total tax does not exceed $10,000 and the monthly payments will pay your tax debt in full within 3 years.
- You can ask your tax professional to help you set up a payment plan. This can be beneficial if you need to negotiate a lower monthly payment that fits into your budget. You will need help from a tax professional if you do not meet the IRS's criteria for automatic acceptance of an installment agreement.
- The IRS will not approve your installment agreement if you have not yet filed all your tax returns. You will need to file all your back taxes before requesting a monthly payment plan.
- If paying by check or money order, mail your monthly payment to the IRS about 7 to 10 days before the due date. This will make sure the IRS receives your payment on time, allowing for any delay in the mail.
What You Need:
- Copies of your tax returns.
- A good idea of how much you can afford to pay each month.
- Your checkbook or a voided check if you are setting up automatic withdrawals.
- Register with EFTPS.gov if you want to use the IRS's bill pay system.
Resources on the IRS Web site:
- Form 9465 Installment Agreement Request (pdf)
- Instructions for Form 9465
- Topic 202 - Tax Payment Options
- Electronic Tax Payment Options