It is not a formal payment option, so there are no requests or fees, but interest and any penalties continue to accrue until the tax debt is paid in full. Make your request online through the online payment agreement tool or by phone or mail by submitting Form 9465, request for installment payment agreement. Your specific tax situation will determine what payment options are available to you. Payment options include full payment, a short-term payment plan (pay in 180 days or less) or a long-term payment plan (installment agreement) (monthly payment).
When you choose an IRS payment plan, you know what you owe and when. Confirm the payment information, date and amount by reviewing your recent statement or the confirmation letter you received. To convert your current contract into a direct debit agreement or to make changes to the account associated with your current direct debit agreement, enter the bank path and account number. You should apply for a payment plan if you think you'll be able to pay your taxes in full within the extended time frame.
The cost of an IRS payment plan depends on the plan you choose, how you apply for it, and whether you qualify for a rate reduction. Any tax refunds you must make for other years while you're enrolled in a payment plan will be applied to your balance until you stop owing. It allows you to negotiate your bill with the IRS to help you pay without the stress of worrying about when the agency will come looking for you. You may also be eligible to receive a pledge offer (OIC) in which the IRS agrees to settle your debt for a small amount.
If you are a low-income taxpayer but are unable to make electronic debit payments when you sign up for a DDIA, your user fee will be reimbursed after the installment payment agreement ends. Use the IRS pre-offer evaluation tool under compromise terms to determine if this might be an option for you. If the IRS system identifies you as a low-income taxpayer, the online payment agreement tool will automatically reflect the applicable rate. The IRS sets an interest rate of 8 to 10 percent, which means it's lower than a credit card payment, but there are better alternatives, such as personal loans or home equity loans.
Similarly, if you fail to comply with AI payments and the IRS proposes to cancel it, the collection period is suspended for 30 days. An IRS payment plan is an agreement you make directly with the agency to pay your federal tax bill for a specified period of time. However, if you have a long-term repayment plan, you should choose a payment amount that pays off your debt within 72 months. If you're struggling to save for taxes because you have a low income, the IRS may even forgive part of your debt through a compromise offer.