IRS Payment Options
Explore different ways to resolve your tax debt
Understanding Your Payment Options
When you owe taxes to the IRS, you have several options for resolving your debt. Each has different requirements, benefits, and long-term implications. Understanding these options can help you choose the best path forward for your financial situation.
Important to Remember:
- • Interest and penalties continue to accrue until the debt is paid in full (except for certain agreements)
- • You must stay current on all future tax filings and payments
- • The IRS may file a federal tax lien for unpaid balances over $10,000
- • Some options require meeting specific financial criteria
Pay in Full
Pay your entire tax liability immediately
Best for: Those with available funds who want to resolve everything immediately
Benefits
- Stops all penalties and interest immediately
- Clears your account completely
- No ongoing obligations
- Best long-term option
Considerations
- Requires immediate funds
- May cause financial strain
- No payment flexibility
How to Apply
Pay online at IRS.gov, by phone, mail, or in person
Short-Term Payment Plan (120 days)
Additional time to pay without formal installment agreement
Best for: Those who can pay within 120 days but need extra time
Benefits
- Up to 120 days to pay
- No setup fee required
- Simple online application
- Lower penalties than long-term plans
Considerations
- Limited to 120 days
- Must pay in full by deadline
- Interest continues to accrue
How to Apply
Apply online through IRS Online Payment Agreement tool
Installment Agreement
Monthly payment plan for larger tax debts
Best for: Those with steady income who need extended payment terms
Benefits
- Manageable monthly payments
- Prevents collection actions
- Reduces penalty rate to 0.25%
- Flexible payment terms
Considerations
- Setup fees apply ($31-$225)
- Interest continues to accrue
- Must stay current on future filings
How to Apply
Apply online, by phone (1-800-829-1040), or mail Form 9465
Offer in Compromise
Settle your tax debt for less than the full amount
Best for: Those with severe financial hardship who cannot pay the full amount
Benefits
- Pay less than full amount owed
- Fresh start opportunity
- Stops collection actions during review
- Clears entire debt when accepted
Considerations
- Strict qualification requirements
- Complex application process
- Low acceptance rate (20-30%)
- Non-refundable application fee
How to Apply
Submit Form 656 with required documentation and fees
Currently Not Collectible
Temporary halt to collections due to financial hardship
Best for: Those experiencing severe financial hardship with no ability to pay
Benefits
- Stops all collection activities
- No monthly payments required
- Prevents levies and liens
- Provides breathing room
Considerations
- Interest continues to accrue
- Periodic financial reviews
- Temporary status only
- Must stay current on future filings
How to Apply
Contact IRS at 1-800-829-1040 or submit Form 433-F
How to Choose the Right Option
Consider Your Financial Situation:
- Can you pay in full within 120 days? → Short-term plan
- Have steady income but need time? → Installment agreement
- Severe financial hardship? → Currently Not Collectible
- Cannot pay full amount ever? → Offer in Compromise
Important Factors:
- Total amount owed (including penalties and interest)
- Your monthly income and essential expenses
- Assets you own and their equity value
- Your ability to stay current on future taxes
Important Considerations
Before Choosing:
- • Calculate total debt including penalties and interest
- • Assess your complete financial situation
- • Consider your ability to make future payments
- • Evaluate impact on credit and future tax compliance
- • Understand the long-term implications of each option
Professional Advice:
- • Complex situations may require licensed professional help
- • Tax attorneys can provide representation
- • CPAs can help with financial planning
- • Enrolled agents can negotiate with the IRS
- • Consider cost vs. benefit of professional services
Official IRS Resources
Get official information and apply for payment options directly through the IRS
Need Help?
Call the IRS at 1-800-829-1040 to discuss your payment options or get help with your specific situation.