Are IRS Payment Plans Worth It?

An IRS payment plan can provide taxpayers with immediate relief from the burdensome task of paying off a large tax debt in one lump sum. By allowing taxpayers to spread out payments over time, it offers a more manageable way to pay off what they owe. Additionally, this type of agreement may also help reduce costly additional interest or penalties that the IRS may otherwise assess. 

However, it is important to consider the drawbacks before you decide whether this route is right for you. Signing an installment agreement requires you to enter into a legally binding contract with the IRS and make regular payments until your balance is paid in full. If a payment is missed or you fail to complete the agreement in its entirety, further penalties and fees may be applied by the IRS. Ultimately, an IRS payment plan can be valuable for those who cannot afford to pay their full tax debt at once but need professional assistance developing a workable budget and timely payment schedule.

What Is An IRS Payment Plan?

Installment Agreement

An IRS payment plan is a practical and workable solution for anyone struggling to pay off their federal taxes.

It offers you the opportunity to pay off your tax debt over a longer period of time than may otherwise be allowed, and with more manageable payments.


An installment agreement also grants the ability to reduce interest rates and/or penalties accruing on your tax debt, making it a cost-effective way to manage your finances and satisfy your financial obligations to the IRS.


Negotiating an IRS payment plan is easy—simply contact the Internal Revenue Service directly or enlist the help of an experienced tax professional in order to ensure you are set up on an agreement that works best for you.

Benefits Of Setting Up A Payment Plan With The IRS

Setting up a payment plan with the Internal Revenue Service (IRS) can provide several benefits, as you have the option to pay off your balance over time, avoiding unmanageable one-time lump sum payments. These plans allow for anywhere from 72 to 84 months for repayment, depending on the amount owed.

Additionally, smaller penalties may be implemented in comparison with penalties accrued from late payments or non-payments of your taxes. If desired, you can also choose to pay off your entire balance at once without incurring additional fees or penalties. However, it should be noted that when entering into an installment agreement with the IRS, it does not extend the 10-year statute of limitation set by IRS regulations during which time they are able to collect your tax debt.

How To Apply For An IRS Payment Plan?

Applying for an IRS payment plan can be a great way to manage your tax debt. Once you have filed all of your forms and received an amount due from the IRS, you can easily apply for an installment agreement through their system. The process is simple, but there are certain criteria you must meet in order to qualify. You will need to prove that you have been consistent with filing taxes in the past and can demonstrate financial hardship if applicable. 

During this process, make sure to submit any supporting documents required as soon as possible in order to ensure quick and accurate processing on the IRS's end. A reputable tax professional can help you apply for a payment plan and ensure that everything is done correctly so that you can take the best course of action when it comes to taking care of your taxes.

What Is The Most Affordable Monthly Payment Approved By the IRS? 

The lowest monthly payment the IRS will accept on an installment agreement depends on your individual financial situation and the amount of tax debt that you owe. If you owe the IRS less than $10,000 and are eligible for their "guaranteed" installment plan, you can design your monthly payments to fit with what fits within your budget. Understandably these types of agreements usually last three years long so it's important that before making any commitments you understand all of your legal rights as well as obligations when dealing with the IRS -- if need be seek advice from an expert!

IRS Payment Plans

How Long Does The IRS Give You On A Payment Plan?

The IRS allows taxpayers to enter into a Streamlined Installment Agreement, depending on the amount and type of tax they owe. Under these agreements, taxpayers are tasked with paying the full debt within 72 months (six years) in order to stay in compliance with US tax laws. Financial documentation is not required to set up this payment plan; however, taxpayers must make each scheduled payment within the six-year limit in order for their agreement to remain in effect.

These agreements offer taxpayers an opportunity to pay off their debt without incurring a large financial burden by spreading them out over time, but it's important to work within the rules of the agreement so that you avoid accruing further penalties from the IRS.

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