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What is an IRS payment plan?

An IRS payment plan is an agreement you make directly with the IRS  to pay your federal tax bill over a certain amount of time. There are two kinds of IRS payment plans: short-term and long-term.

Typically you’ll make monthly payments to settle what you owe. So long as you’re keeping up with that, the IRS usually won’t garnish your wages or seize any bank accounts or property. But getting on an IRS payment plan doesn’t get you out of interest and penalties for late payment; those accrue until your balance is zero.

Who is eligible for an IRS payment plan?

You don’t need to call the IRS to get on a payment plan. You can apply online for a short- or long-term plan if you meet the following criteria:

  1. Long-term payment plan: You owe $50,000 or less in combined tax, penalties, and interest, and you’ve filed all your tax returns.
  2. Short-term payment plan: You owe less than $100,000 in combined tax, penalties, and interest.

Minimum monthly payments for IRS payment plans

In general, you can choose what you pay every month. That is, the IRS will ask you what you can afford. However, if you’re on a long-term payment plan, you must choose a payment amount that will pay off your debt within 72 months.

What are the fees for an IRS payment plan?

The cost of an IRS payment plan depends on which plan you choose, how you apply for the plan, and whether you qualify for a fee reduction.

Payment plan type

Maximum you can owe to qualify

Setup fee & payment methods

Short-term payment plan

(120 days)

$100,000 in combined tax, penalties, and interest.

$0 to apply online, by phone, by mail, or in person. Pay balance by:

  • Withdrawals from your checking account or savings account (Direct Pay),

  • E-pay online or by phone via the IRS’s Electronic Federal Tax Payment System, or

  • Check, money order, or debit/credit card.

Long-term payment plan

(120 days or more)

$50,000 in combined tax, penalties, and interest.

If you pay through automatic debit withdrawals:

  • $31 setup fee to apply online.

  • $107 setup fee to apply by phone, mail, or in person.

  • The setup fee may be waived for low-income taxpayers.

If you pay by another method (e.g., Direct Pay, EFTPS, or money order):

  • $130 setup fee to apply online.

  • $225 setup fee to apply by phone, mail, or in person.

  • $43 setup fee for low-income taxpayers; may later be reimbursed.

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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

For more information or if you need additional assistance, please use the contact information below.

Clergy Financial Resources
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Maple Grove, MN 55369

Tel: (763) 425-8778 
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