Installment Agreement Options

What is an Installment Agreement?

An installment agreement is a formal agreement between you and the IRS that allows you to pay your tax debt in monthly installments over time, rather than paying the full amount immediately. This can help if you owe taxes but can't pay in full by the due date.

Benefits of Installment Agreements:

Avoid Collection Actions: Stop wage garnishment, bank levies, and liens
Manageable Payments: Spread payments over time
Interest Reduction: Lower interest rate than other IRS collection tools
Flexible Terms: Various payment plan options available

Types of Installment Agreements

📅 Short-Term Payment Plan

Best for smaller tax debts that can be paid off quickly.

Maximum term: 120 days (4 months)
Tax debt up to $100,000
Automatic approval for eligible taxpayers
No user fee

📊 Long-Term Payment Plan

For larger tax debts that require extended payment periods.

Maximum term: 72 months (6 years)
Tax debt over $100,000 or longer term needed
Manual review required
Possible user fee

💰 Guaranteed Payment Plan

Direct debit from your bank account for guaranteed payments.

Automatic payments on due date
No missed payments
Lower interest rate
Available for both short and long-term plans

Eligibility Requirements

Who Can Apply?

You may be eligible for an installment agreement if:

You have filed all required tax returns
You have no outstanding tax liens
You are not currently in bankruptcy
You have no felony convictions for financial crimes
You can show you can't pay in full immediately

Tax Debt Limits:

Short-term: Up to $100,000 total tax debt
Long-term: No specific limit, but subject to approval
Guaranteed: Same limits as other installment agreements

How to Apply

Online Application (Recommended):

Access Online Payment Agreement: Visit IRS.gov and search for "Online Payment Agreement"
Create Account: Set up or log into your IRS online account
Enter Tax Information: Provide tax year and amount owed
Choose Payment Plan: Select short-term or apply for long-term
Submit Application: Review and submit your agreement
Receive Confirmation: Get approval notification via mail and email

Paper Application:

Download Form 9465 from IRS.gov
Complete and mail to your IRS processing center
Processing takes 30-60 days
Not recommended due to slower processing

Payment Terms and Interest

Interest Rate:

Installment agreements accrue interest at the federal short-term rate plus 3 percentage points. This is generally lower than the interest rate for other IRS collection activities.

Minimum Monthly Payment:

Short-term plans: $10 minimum per month
Long-term plans: Based on your ability to pay
Guaranteed plans: Same as other installment agreements

Payment Due Date:

Payments are typically due on the 15th of each month, or you can choose a different date that works better for your situation.

Fees and Costs

User Fee:

Short-term plans: No user fee
Long-term plans: $225 one-time user fee (may be waived)
Guaranteed plans: No additional fee beyond regular user fee

Waiver of User Fee:

The user fee may be waived if:

Your income is below 250% of the federal poverty level
You qualify for the low-income taxpayer clinic
You have a disability that prevents you from working
You are a victim of tax-related identity theft

Default and Termination

What Happens if You Default?

If you miss payments or violate the terms of your agreement:

Late fees: Additional charges for missed payments
Termination: Agreement can be cancelled
Collection actions: May resume wage garnishment or levies
Interest increase: Higher interest rate may apply

How to Avoid Default:

Set up automatic payments
Update contact information
Notify IRS of financial changes
Request modifications if needed

Modifying Your Agreement

When Can You Modify?

You can request changes to your installment agreement if your financial situation changes:

Income changes: Job loss, salary reduction, or new employment
Expense changes: Medical bills, housing costs, or family changes
Payment amount: Request lower or higher monthly payments
Payment date: Change the monthly due date

How to Request Modifications:

Contact your IRS representative
Use the online payment agreement system
Submit Form 433-D (Installment Agreement)
Provide documentation of financial changes

Frequently Asked Questions

Can I get an installment agreement if I haven't filed my taxes?

No, you must file all required tax returns before applying for an installment agreement.

How long does approval take?

Short-term plans are often approved immediately online. Long-term plans may take 30-60 days.

Can I pay off my agreement early?

Yes, you can pay off your balance at any time without penalty.

What if I move or change my address?

Update your contact information immediately through your online account or by contacting the IRS.