Short-term vs. long-term IRS payment plans
Short-term and long-term plans have different balance limits and repayment timelines. Here’s how eligibility for the plans compares:
| Plan | General online eligibility | Payment schedule |
|---|---|---|
| Short-term plan | Owe less than $100,000 in combined tax, penalties, and interest | Pay in full within 180 days |
| Long-term plan | Owe $50,000 or less and have filed all required returns | Make monthly payments until the balance is paid |
Source: Internal Revenue Service
Note: People who don’t meet the online limits may still qualify, but the IRS may request Form 9465 and financial information.
IRS payment plan fees
Long-term setup fees depend on how you apply and make payments:
| How you apply | Standard fee | Low-income fee |
|---|---|---|
| Online with direct debit | $22 | Waived |
| Online with another payment method | $22 | Waived |
| Phone, mail, or in person with direct debit | $107 | $43, which may be reimbursed |
| Phone, mail, or in person with another payment method | $178 | $43, which may be reimbursed |
Source: Internal Revenue Service
Note: Short-term plans have no setup fee, but card-processing fees may still apply.
Interest and penalties
A payment plan doesn’t stop interest or penalties. For July through September 2026, the IRS underpayment interest rate is 7%, compounded daily. The rate is adjusted quarterly.
The failure-to-pay penalty is generally 0.5% of unpaid tax per month. If you filed on time as an individual and have an approved payment plan, it generally falls to 0.25% per month while the agreement remains in effect.
Missed payments and default
Missing a payment or adding a new unpaid tax balance may put the plan into default. The IRS generally sends a CP523 notice (a letter that communicates their intent to terminate your installment agreement and seize assets) and gives you 30 days to respond before terminating the agreement. Responding within this time frame gives you the opportunity to work with the IRS for reinstatement or revised terms.
If the plan ends, the IRS may resume collection actions.
How to apply for an IRS payment plan
The fastest option is usually the IRS Online Payment Agreement tool, which can provide an immediate decision.
You can also apply by phone (800-829-1040) or submit Form 9465 by mail. The IRS may request Form 433-F or other financial information in some cases.
