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IRS Payment Plans · Form 9465
The right payment plan is the one you can still afford in month thirty.
The IRS approves most payment plans. It also terminates a large share of them, because the payment was set too high or a new balance appeared. Setting the plan up correctly is simple. Setting it up so that it survives takes more thought.
The IRS offers short-term payment plans of 180 days or less for balances under $100,000, and long-term installment agreements with monthly payments. Individuals who owe $50,000 or less in combined tax, penalties, and interest, and who have filed all required returns, can apply online without a financial statement. Larger balances require financial disclosure on Form 433-A or 433-F. While an agreement is pending or in effect, the IRS generally may not levy. Penalties and interest continue until the balance is paid.
The kinds of agreement
- Short-term plan. Full payment within 180 days. No setup fee. Available online for balances under $100,000.
- Guaranteed agreement. For income tax balances of $10,000 or less, the IRS must accept a plan that pays within three years if you have been compliant for five years.
- Streamlined agreement. For $50,000 or less, paid within 72 months or before the collection period ends. No financial statement, and usually no lien filing at lower balances.
- Financial-statement agreement. Above those limits, the payment is based on your income minus the IRS's allowable living expenses, documented on Form 433-A or 433-F. The IRS may ask you to sell or borrow against assets first, and it will usually file a notice of federal tax lien.
- Partial payment agreement. When your ability to pay will not retire the debt before the ten-year collection period expires, the IRS can accept payments that cover only part of it. The IRS reviews these every two years.
What it costs
Long-term plans carry a setup fee, lowest when you apply online and pay by direct debit. Low-income taxpayers can have the fee waived or reimbursed. Interest continues at the federal rate, and the failure-to-pay penalty continues at a reduced rate while the agreement is in effect for taxpayers who filed on time. A plan is a loan from an expensive lender. It is still usually cheaper than a levy.
Why agreements default
- A missed or late payment.
- A new balance. Owing on next year's return is the most common cause. Withholding or estimated payments have to be fixed at the same time the plan is set up.
- An unfiled return.
- Failing to provide updated financial information when asked.
Before terminating, the IRS sends a notice, usually CP523, and you have 30 days to cure or to appeal through the Collection Appeals Program. A reinstated agreement carries another fee. A terminated one puts you back in line for levies.
When a plan is the wrong answer
If the payment the IRS calculates would leave you unable to cover basic expenses, currently not collectible status fits better. If your income and assets will never pay the debt, an offer in compromise or a partial payment agreement may end it for less. If penalties make up much of the balance, ask for abatement first so the plan is built on the smaller number.
When a lawyer matters
Above $50,000, where the IRS's expense standards drive the payment and the financial statement is signed under penalty of perjury. For businesses with payroll tax debt, where the agreement depends on staying current and protects the owners from personal assessments only if it is structured to. And whenever a revenue officer is involved, because the officer has discretion a call center does not.
Official sources
The rules described on this page come from these primary sources. Check them, or the notice you received, for current figures and dates.
- IRS: Payment plans and installment agreements
- IRS: About Form 9465, Installment Agreement Request
- IRS Form 433-F: Collection Information Statement (PDF)
- 26 U.S.C. 6159: agreements for payment of tax liability in installments
- 26 U.S.C. 6331: levy and distraint, including the bar on levy while an agreement is pending
When to call
Get help with the plan if:
- You owe more than $50,000, or your business owes payroll taxes.
- The IRS proposed a monthly payment you cannot afford.
- You received a CP523 notice that your agreement will be terminated.
- You are on a plan and will owe again on this year's return.
- A levy is scheduled and you have not yet proposed an agreement.
- You are not sure whether a plan, an offer, or hardship status fits your numbers.
Common questions
Direct answers.
How much can I owe and still get an IRS payment plan online?
Individuals can apply online for a long-term payment plan if they owe $50,000 or less in combined tax, penalties, and interest and have filed all required returns. Short-term plans of 180 days or less are available online for balances under $100,000.
Will the IRS file a lien if I am on a payment plan?
It depends on the balance and the type of agreement. The IRS generally does not file a notice of federal tax lien for smaller streamlined agreements, especially with direct debit, and generally does file one for larger balances and agreements based on a financial statement.
Does an installment agreement stop IRS levies?
Generally yes. The IRS may not levy while an installment agreement request is pending, for 30 days after a rejection, during an appeal of the rejection, or while the agreement is in effect.
Do penalties and interest stop during a payment plan?
No. Interest continues on the unpaid balance, and the failure-to-pay penalty continues, at a reduced rate for taxpayers who filed their returns on time, until the debt is paid.
What happens if I miss a payment?
The IRS sends a notice of intent to terminate the agreement, usually a CP523. You generally have 30 days to make up the payment or appeal. If the agreement is terminated, the IRS can resume levy action.
What is a partial payment installment agreement?
It is an agreement with monthly payments that will not fully pay the debt before the collection period expires. It requires a full financial statement, the IRS may require you to use equity in assets first, and the agreement is reviewed periodically.
Related problems
IRS notices rarely arrive alone.
Currently Not Collectible
If paying the IRS would leave you unable to cover rent, food, and medicine, the IRS can stop collecting. The debt stays, and so does the clock that eventually ends it.
Read more →CP2000 Notice
The IRS says the income on your return does not match what employers, banks, or brokers reported. It is a proposal, not a bill, and it has a response date.
Read more →Final Notice of Intent to Levy
CP504, LT11, and Letter 1058 look alike and mean different things. One of them starts a 30-day clock that protects your bank account and your right to go to court.
Read more →Notice of Deficiency (90-Day Letter)
The IRS has formally determined that you owe more tax. You have 90 days to take the dispute to the U.S. Tax Court without paying first. The IRS cannot extend that date.
Read more →Bank Levy & Wage Garnishment Release
A frozen bank account is held for 21 days before the money goes to the IRS. A wage levy repeats every payday until it is released. Both can be released.
Read more →Offer in Compromise
The IRS will settle a tax debt for less than the balance when the numbers show it cannot collect the full amount. The formula is public. Most rejected offers ignored it.
Read more →Next step
Decide on the number you can pay before the IRS tells you theirs.
Send a recent notice and a rough monthly budget. The first review tells you which option your numbers support.