You may be able to get rid of tax debt a little at a time with an installment agreement. The IRS may agree to a payment plan if your debt is too high to pay in one lump sum. IRS tax debt settlement help comes as either short- or long-term payment plans, depending on the amount you owe. 

Although payment plans can help with tax debt relief, some have setup fees and still accrue interest and penalties until paid in full. You may also receive additional fees for making payments by credit card. 

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Learn How IRS Payment Plans Work
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The IRS usually charges penalties if you do not accurately file or pay all of your taxes by the deadline. Then, the government can charge interest on these penalties, which increases the amount you owe.   

The government typically offers short- and long-term payment plans. The short-term payment plan lasts for 180 days or less. It is usually available if you owe less than $100,000, including interest and penalties. The IRS does not charge a setup fee for this plan. 

The long-term payment plan is for more than 180 days. It is available if you owe less than $50,000, including interest and penalties. The government generally requires a Direct Debit Installment Agreement if your balance is more than $25,000. The long-term payment plan has a setup fee of:

  • $31 if you apply online and pay automatic monthly withdrawals from your checking or savings account. 
  • $130 if you apply online and pay by check, money order, or card without an automatic debit. 
  • $107 or $225 if you apply by phone, mail, or in person and do not have an automatic debit.
  • $0 or $43 if you qualify as a low-income taxpayer or meet certain conditions.
  • $10 if you need to change your existing payment plan online. 
  • $89 if you need to change your existing payment plan by phone, mail, or in person.
  • $43 if you need to change your existing payment plan by phone, mail, or in person and qualify as a low-income taxpayer or meet certain conditions.

Any of your future tax refunds are paid toward your debt until it is paid in full. Your recent gross income must be at or lower than 250 percent of the federal poverty level for the year to qualify as low-income and avoid or reduce the setup fee.

To apply for an installment plan, you typically need to provide:

  • Your name and address match your most recent tax return.
  • Your filing status, such as single, head of household, or married and filing jointly.
  • Your date of birth. 
  • Your Social Security number. 
  • Your email address.
  • The amount of taxes you owe.
  •  Financial account numbers.

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Updated on 02/27/2023