How to set up an IRS installment payment agreement
Question askedHow do you set up an IRS installment agreement?
Quick answer: For 2025 returns, if you owe $50,000 or less in combined tax, interest, and penalties, you can apply online for a monthly payment plan, or mail in Form 9465; approval usually comes with a user fee (which can be reduced, waived, or reimbursed depending on income and payment method).
How it works
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Choose your application method. IRS Publication 1345 explains that taxpayers who can't pay the amount they owe for Form 1040 series returns and owe $50,000 or less in combined taxes, interest and penalties may use the Online Payment Agreement (OPA) application to request a payment plan. If someone else is applying on your behalf, authorized representatives with a power of attorney may use OPA on the taxpayer's behalf. Applying online has a speed advantage: OPA will result in immediate notification of whether the payment plan is approved.
Alternatively, you can submit Form 9465, Installment Agreement Request, to the IRS by mail, and a tax software provider can transmit it electronically with your e-filed return data, or it may be submitted later by mail. Be aware that it may take 30 days or more for a response to Form 9465, regardless of how it is submitted.
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Understand the required terms. Under the Internal Revenue Code, once accepted, the agreement requires full payment of such liability within 3 years, and the taxpayer agrees to comply with the provisions of this title for the period such agreement is in effect.
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Pay the user fee (unless waived). Publication 17 notes that if you can't pay the full amount due with your return, you can ask to make monthly installment payments, but you will be charged interest and may be charged a late payment penalty on the tax not paid by the date your return is due, and if your request is granted, you must also pay a fee. The fee amount depends on how you apply and pay: the IRS charges a user fee, which may be waived or reimbursed for low-income taxpayers, and taxpayers who apply through OPA are charged a lower user fee, and an even lower fee if they use direct debit.
The Code also builds in relief for lower-income taxpayers: if adjusted gross income doesn't exceed 250% of the applicable poverty level, if the taxpayer has agreed to make payments by electronic payment through a debit instrument, no fee shall be imposed, and if the taxpayer is unable to pay electronically, the Secretary shall, upon completion of the installment agreement, pay the taxpayer an amount equal to any such fees imposed (IRC § 6159(f)(2)).
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Make payments. Publication 17 says in addition to paying by check or money order, you can use a credit or debit card or direct payment from your bank account to make installment agreement payments.
Risks and limits
- The IRS can end the deal. Under IRC § 6159(b), the agreement can be terminated if information which the taxpayer provided to the Secretary prior to the date such agreement was entered into was inaccurate or incomplete, or the Secretary believes that collection of any tax to which an agreement relates is in jeopardy. It can also be modified or terminated if the financial condition of a taxpayer... has significantly changed, or if the taxpayer fails to pay any installment when due, fails to pay any other tax liability when due, or fails to provide requested financial condition updates.
- If you request a review of a termination, the IRS must provide one: the Secretary shall establish procedures for an independent administrative review of terminations of installment agreements... for taxpayers who request such a review.
- Publication 17 recommends weighing alternatives first: before requesting an installment agreement, you should consider other less costly alternatives, such as a bank loan or credit card payment.
In practice
An installment agreement spreads out payment but doesn't stop interest and penalties from accruing on the unpaid balance. To apply online, go to IRS.gov/OPA, or file Form 9465 by mail.
Given how fees, eligibility thresholds, and enforcement terms depend on your specific balance and income, it's worth discussing your situation with a CPA before applying.
Sources relied upon
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IRS publication IRS Publication 1345 — Handbook for Authorized IRS e-file Providers — Payment Options for Taxpayers › Installment Agreement, p. 18
· see it highlighted in context
· official source (p. 18) ↗
“Taxpayers who can’t pay the amount they owe for Form 1040 series returns and owe $50,000 or less in combined taxes, interest and penalties may use the Online Payment Agreement (OPA)Online Payment Agreement (OPA) application to request a payment plan (installment agreement).”
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IRS publication IRS Publication 1345 — Handbook for Authorized IRS e-file Providers — Payment Options for Taxpayers › Installment Agreement, p. 18
· see it highlighted in context
· official source (p. 18) ↗
“Authorized representatives with a power of attorney may use OPA on the taxpayer’s behalf.”
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IRS publication IRS Publication 1345 — Handbook for Authorized IRS e-file Providers — Payment Options for Taxpayers › Installment Agreement, p. 18
· see it highlighted in context
· official source (p. 18) ↗
“OPA will result in immediate notification of whether the payment plan is approved.”
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IRS publication IRS Publication 1345 — Handbook for Authorized IRS e-file Providers — Payment Options for Taxpayers › Installment Agreement, p. 18
· see it highlighted in context
· official source (p. 18) ↗
“Alternatively, they can submit Form 9465Form 9465, Installment Agreement Request, to the IRS by mail. The Provider can transmit Form 9465 electronically (if supported by software) with the taxpayer’s electronic return data, or the form may be submitted later by mail.”
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IRS publication IRS Publication 1345 — Handbook for Authorized IRS e-file Providers — Payment Options for Taxpayers › Installment Agreement, p. 18
· see it highlighted in context
· official source (p. 18) ↗
“It may take 30 days or more for a response to Form 9465, regardless of how it is submitted.”
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Statute 26 U.S.C. § 6159 — Agreements for payment of tax liability in installments — (d) Secretary required to review installment agreements for partial collection every two years
· see it highlighted in context
· official source ↗
· same text at Cornell LII ↗
“the agreement requires full payment of such liability within 3 years; and (5) the taxpayer agrees to comply with the provisions of this title for the period such agreement is in effect.”
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IRS publication IRS Publication 17 — Your Federal Income Tax (Individuals) — Introduction › How Do I Prepare My Return?, p. 18
· see it highlighted in context
· official source (p. 18) ↗
“Installment Agreement If you can’t pay the full amount due with your return, you can ask to make monthly installment payments for the full or a partial amount. However, you will be charged interest and may be charged a late payment penalty on the tax not paid by the date your return is due, even if your request to pay in installments is granted. If your request is granted, you must also pay a fee.”
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IRS publication IRS Publication 1345 — Handbook for Authorized IRS e-file Providers — Payment Options for Taxpayers › Installment Agreement, p. 18
· see it highlighted in context
· official source (p. 18) ↗
“If the installment agreement is accepted, the IRS charges a user fee, which may be waived or reimbursed for low-income taxpayers. Taxpayers who apply through OPA are charged a lower user fee, and an even lower user fee if they use the direct debit payment option.”
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Statute 26 U.S.C. § 6159 — Agreements for payment of tax liability in installments — (f) Installment agreement fees › (2) Waiver or reimbursement
· see it highlighted in context
· official source ↗
· same text at Cornell LII ↗
“(2) Waiver or reimbursement In the case of any taxpayer with an adjusted gross income, as determined for the most recent year for which such information is available, which does not exceed 250 percent of the applicable poverty level (as determined by the Secretary)— (A) if the taxpayer has agreed to make payments under the installment agreement by electronic payment through a debit instrument, no …”
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IRS publication IRS Publication 17 — Your Federal Income Tax (Individuals) — Introduction › How Do I Prepare My Return?, p. 18
· see it highlighted in context
· official source (p. 18) ↗
“In addition to paying by check or money order, you can use a credit or debit card or direct payment from your bank account to make installment agreement payments.”
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Statute 26 U.S.C. § 6159 — Agreements for payment of tax liability in installments — (b) Extent to which agreements remain in effect › (2) Inadequate information or jeopardy
· see it highlighted in context
· official source ↗
· same text at Cornell LII ↗
“(2) Inadequate information or jeopardy The Secretary may terminate any agreement entered into by the Secretary under subsection (a) if— (A) information which the taxpayer provided to the Secretary prior to the date such agreement was entered into was inaccurate or incomplete, or (B) the Secretary believes that collection of any tax to which an agreement under this section relates is in jeopardy.”
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Statute 26 U.S.C. § 6159 — Agreements for payment of tax liability in installments — (b) Extent to which agreements remain in effect › (2) Inadequate information or jeopardy
· see it highlighted in context
· official source ↗
· same text at Cornell LII ↗
“(b) Extent to which agreements remain in effect › (3) Subsequent change in financial conditions If the Secretary makes a determination that the financial condition of a taxpayer with whom the Secretary has entered into an agreement under subsection (a) has significantly changed, the Secretary may alter, modify, or terminate such agreement.”
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Statute 26 U.S.C. § 6159 — Agreements for payment of tax liability in installments — (b) Extent to which agreements remain in effect › (2) Inadequate information or jeopardy
· see it highlighted in context
· official source ↗
· same text at Cornell LII ↗
“(b) Extent to which agreements remain in effect › (4) Failure to pay an installment or any other tax liability when due or to provide requested financial information The Secretary may alter, modify, or terminate an agreement entered into by the Secretary under subsection (a) in the case of the failure of the taxpayer— (A) to pay any installment at the time such installment payment is due under suc…”
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Statute 26 U.S.C. § 6159 — Agreements for payment of tax liability in installments — (d) Secretary required to review installment agreements for partial collection every two years
· see it highlighted in context
· official source ↗
· same text at Cornell LII ↗
“(f) Installment agreement fees The Secretary shall establish procedures for an independent administrative review of terminations of installment agreements under this section for taxpayers who request such a review.”
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IRS publication IRS Publication 17 — Your Federal Income Tax (Individuals) — Introduction › How Do I Prepare My Return?, p. 18
· see it highlighted in context
· official source (p. 18) ↗
“But before requesting an installment agreement, you should consider other less costly alternatives, such as a bank loan or credit card payment.”
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