IRS Payment Plans (Installment Agreements)

What is an Installment Agreement

An IRS Installment Agreement is a formal payment plan that lets you resolve your balance over time while staying compliant. Interest and the failure-to-pay penalty continue to accrue until paid in full.

Types of payment plans

Short-term payment plan

Up to 180 days, no setup fee, interest and penalties continue.

Long-term (streamlined) plan

Generally available up to about $50,000 for individuals with full pay in 72 months and all returns filed.

Non-streamlined plan

Used when balances or terms fall outside streamlined limits. Requires more financial disclosure and IRS approval.

Business plans

Small businesses may qualify for in-business trust fund express IAs with specific conditions.

Who qualifies

• All required returns filed and current payments up to date.
• Within plan limits for streamlined options, or willing to provide financials for non-streamlined.
• No active bankruptcy on the same liabilities.

How payments are calculated

For streamlined plans, payment = balance divided by allowed months, subject to minimums. For non-streamlined, the IRS reviews income and necessary expenses to set an affordable payment.

Fees, interest, and penalties

Expect a setup fee for long-term plans. Interest and failure-to-pay penalties continue. Using direct debit may reduce fees and avoid default risk.

How to apply

1. File all missing returns and make current-year payments.
2. Check if you fit streamlined limits. If not, prepare a financial statement.
3. Apply online or by phone, or file the appropriate form per IRS instructions.
4. Choose direct debit to reduce fees and prevent missed payments.

Keeping your plan in good standing

Pay on time, file on time, and avoid new balances. Contact the IRS before a missed payment to request a temporary adjustment if needed.

Alternatives and when to switch

• Offer in Compromise
• Currently Not Collectible
• Penalty relief

FAQ