Online payment plans
Most individual taxpayers qualify to set up an online payment plan with the IRS, and it only takes a few minutes to apply. Applicants are notified immediately if their request is approved. There is no need for them to contact the IRS for a payment plan or an installment agreement. The agency generally processes online payment plans quicker than requests made with electronically filed tax returns. If a taxpayer just filed their return and they know they’ll owe a balance, they may be able to set up a payment plan online before they even receive a notice or bill.
There are two main types of online payment plans:
- Short-term payment plan – The payment period is 180 days or less and the total amount owed is less than $100,000 in combined tax, penalties, and interest. There’s no fee for setting one up, though interest and the late-payment penalty continue to accrue.
- Long-term payment plan – Payments are monthly, and the amount owed must be less than $50,000 in combined tax, penalties, and interest. If the IRS approves a long-term payment plan, also known as an installment agreement, a setup fee normally applies. Low-income taxpayers may qualify to have the fee waived or reimbursed. In addition, for anyone who filed their return on time, the late-payment penalty rate is reduced while an installment agreement is in effect. The late payment penalty accrues at the rate of 0.25% per month, instead of up to 1% per month.
Taxpayers who do not qualify for an online payment agreement may still be able to pay in installments. Taxpayers should review the Additional Information on Payment Plans page of IRS.gov for details.