If you owe the IRS and can’t pay in full, you’re not alone. Sometimes taxpayers panic, fearing collection actions, penalties, maybe even wage garnishments. That’s when the big tax resolution companies swoop in, promising relief—for a hefty fee.
But here’s the secret those big tax resolution companies don’t want you to know: you can set up an IRS payment plan yourself, often in just minutes, without paying thousands of dollars to them.
Here’s how to do it:
Step 1: File All Your Tax Returns First
Before the IRS will approve a payment plan, you must have all required tax returns filed. If you have unfiled returns, your request will be denied, and the IRS may even ramp up collection efforts.
Many taxpayers who owe back taxes also have multiple years of unfiled returns, and the IRS won’t negotiate until everything is up to date. If you’re behind on your filings, don’t panic—help is available.
- Find a CPA specializing in back tax returns. A tax professional who handles old returns can quickly file what’s required, minimize penalties, and ensure accuracy before you request a payment plan.
- Avoid tax resolution firms that focus on “negotiation” before filing your returns. These companies often charge large upfront fees but can’t help you until your returns are filed. How do they know how much you will owe if the taxes haven’t been filed?
Once all your returns are submitted, you’ll be eligible to set up an installment agreement with the IRS.
What Is an IRS Payment Plan?
An IRS payment plan, also called an installment agreement, allows taxpayers to pay off their tax debt over time. If you qualify, the IRS will stop collection actions (like levies or liens) as long as your installment agreement is in good standings. (If you miss a few payments the IRS will cancel the agreement.)
Types of IRS Payment Plans
- Short-Term Payment Plan (For Balances Under $100,000)
- Pay off your tax debt within 180 days
- No setup fee!!!
- Payments can be made via direct debit, check, or card
- Apply online, by phone, or via Form 9465
- Long-Term Payment Plan (For Balances Under $50,000)
- Monthly payments for up to 72 months
- Setup fees apply
- Apply online at the IRS website, by phone, or using Form 9465
- Partial Payment Installment Agreement (PPIA)
- For those who can’t pay the full balance over time
- The IRS settles for less than the total amount due
- Requires financial disclosure and IRS approval
- May involve negotiation with the IRS
- Offer in Compromise (OIC) – A Rare Option
You’ve probably heard commercials promising to settle tax debt for “pennies on the dollar.” That’s an Offer in Compromise, but only about 30% of applications even qualify, let alone are approved. The IRS will approve an OIC only if:
- You can’t afford to pay the full amount
- Your income and assets don’t cover the tax debt
- You meet strict IRS guidelines
How to Apply for an IRS Payment Plan
Setting up a payment plan is easier than most people think. Here’s how to do it:
Online (Fastest Method)
- Visit the IRS Online Payment Agreement Tool
- Select “Apply for a Payment Plan”
- Enter your tax debt details
- Choose a payment method
- Submit your request (approval is often immediate)
By Phone or Mail
- Call the IRS at 1-800-829-1040
Complete Form 9465 and mail it to the IRS
What Happens If You Miss a Payment?
- One missed payment: The IRS may send a warning
- Multiple missed payments: Your agreement may default, and the IRS could resume collections (including wage garnishment or bank levies)
If you’re struggling to pay, contact the IRS immediately to adjust your plan
When a Tax Pro Might Be Worth It
Most taxpayers can set up their own payment plan without expensive tax resolution services. However, you might need professional help if:
- You owe more than $100,000
- The IRS has already placed a lien or levy on your assets
- You want to negotiate a lower payment amount (PPIA or OIC)
You have complex financial circumstances
Final Thoughts: Keep Your Money!
Don’t fall for the fear tactics from the big tax resolution companies wanting thousands $$$ to do what you can handle in minutes. The IRS payment plan system is straightforward, and you can set it up on your own. If you need help, consult a reputable tax professional—not a sales-driven big tax resolution firm.
Still have questions about resolving your tax debt? Contact Tax Rescue CPA—we’ll guide you through your options without the gimmicks.
“Who’s Doing Your Taxes?” – Tax Rescue CPA
