There may be times when taxpayers cannot pay what they owe in full, but remember the IRS has numerous payment plan options available.
The IRS offers several different payment plan options, but taxpayers may want to first consider non-IRS options depending on their financial situation. Regardless of how someone pays, they should act quickly because tax bills get larger as long as they remain unpaid.
Online Self-service Payment Plans
Most taxpayers qualify for an IRS payment plan (or installment agreement) and can use the Online Payment Agreement (OPA) to set it up to pay off an outstanding balance over time. Once taxpayers complete the online application, they receive immediate notification of whether the IRS has approved their payment plan. The process only takes a few minutes, and there’s no paperwork and no need to call, write or visit the IRS.
Types of Online Payment Plans
- Individual Taxpayers
- Short-term payment plans – For taxpayers who have a total balance of less than $100,000 in combined tax, penalties, and interest. This plan gives them an extra 180 days to pay the balance in full.
- Long-term payment plan (also called an installment agreement) – For taxpayers who have a total balance of less than $50,000 in combined tax, penalties, and interest. They can make monthly payments for up to 72 months. Taxpayers are encouraged to set up plan payments using direct debit (automatic bank withdrawal), which eliminates the need to send a payment each month, saves postage costs, and reduces the chance of default. The IRS requires direct debit for balances between $25,000 and $50,000.
- Business Taxpayers
- Long-term payment plan (also called an installment agreement) – For business taxpayers who have a total balance of less than $25,000 in combined tax, penalties, and interest from the current and preceding tax year. They can make monthly payments for up to 24 months. Taxpayers can choose to set up payments using direct debit (automatic bank withdrawal). The IRS requires direct debit for balances between $10,000 and $25,000.
Online Tools for Payment Plans
Qualified taxpayers with existing payment plans may be able to use the Online Payment Agreement to make changes to their plans that include revising payment dates, payment amounts or bank information for direct debit payments.
Individual taxpayers have the option to sign into or create their own Online Account. This account allows them to:
- Check on any scheduled or pending payments.
- Review payment plan details and payment history.
- View the amount they owe.
- Taxpayers who don’t qualify for online self-service should contact the IRS for other payment plan options using the phone number or address on their most recent notice.
- Setup fees may apply for some types of plans.