Tax Payment Options
Because your balance is subject to interest and a monthly late payment penalty, it is in your best interest to pay in full as soon as you can to minimize the additional charges. Penalties are also assessed for failure to file a tax return so you should file immediately even if you cannot pay your balance in full.
There are many ways to pay an outstanding federal income tax liability. You may pay by check or money order, made payable to “United States Treasury.”
For detailed information on paying your taxes by credit or debit card, or other electronic payment, go to http://www.irs.gov/uac/Electronic-Payment-Options-Home-Page, or call IRS at 800-829-1040.
If you cannot pay in full, you should pay as much as possible to reduce the accrual of interest on your account. Please refer to Topic 158 for information needed to ensure that your payment is credited properly.
You should consider financing the full payment of your tax liability through loans, such as a home equity loan from a financial institution or a credit or debit card payment. The interest rate and any applicable fees charged by a bank or credit card company are usually lower than the combination of interest and penalties imposed by the Internal Revenue Code. If you cannot pay in full immediately, the IRS offers additional time, up to 120 days, to pay in full. No fee will be charged for entering this type of arrangement, however, interest and any applicable penalties will continue to accrue until the liability is paid in full.
Installment Agreements
An installment agreement allows you to make a series of monthly payments over time. The IRS offers various options for making monthly payments, such as:
- Direct debit from your bank account;
- Payroll deduction from your employer;
- Payment via check or money order;
- Payment by Electronic Federal Tax Payment System (EFTPS);
- Payment by credit card via phone or Internet; or
- Payment by Online Payment Agreement (OPA).
A one-time installment agreement user fee of $105.00 will be charged when you enter into a standard installment agreement or a payroll deduction installment agreement. If you choose to pay through a direct debit from your bank account the user fee is $52.00. Taxpayers with income at or below 250% of the Department of Health and Human Services poverty guidelines may apply for a reduced user fee of $43.00. You can request the reduced fee using Form 13844 (PDF), Application For Reduced User Fee For Installment Agreements.
Note: The user fee for restructuring or reinstating an established installment agreement is $45.00 regardless of income levels or method of payment.
If you enter into an installment agreement, your monthly payment should be based on your ability to pay and should be an amount that you can pay each month to avoid defaulting.
- If you are not able to provide full payment when you file your tax return, you may request a pre-assessment installment agreement on current tax liabilities by using the Online Payment Agreement (OPA) application on the IRS.gov website. You may also submit Form 9465 (PDF), Installment Agreement Request, or attach a written request for a payment plan to the front of your return.
- If you are not able to provide full payment after you have filed your tax return and received a bill from the IRS (a balance due notice), you may request an installment agreement using the Online Payment Agreement (OPA) application on the IRS.gov website. You also may submit Form 9465 (PDF), Installment Agreement Request, or attach a written request for a payment plan to the front of your return or bill.
- You may also request an installment agreement by calling the toll-free number on the bill.
You must specify the amount you can pay and the day of the month (1st-28th) on which you wish to make your payment each month. The IRS will expect to receive the payment ON the date you indicate; so be sure to figure mailing time into the date you select. The IRS will respond to your request, usually within 30 days, to advise you as to whether your request has been approved or denied, or if more information is needed.
Direct debit and payroll deduction installment agreements enable you to make timely payments automatically and reduce the possibility of default. For a direct debit installment agreement you must provide your checking account number and your bank routing number to initiate the automated withdrawal of the payment.
You may contact the IRS by phone or in person, or you may submit Form 9465 (PDF), Installment Agreement Request, through the mail. The form has space for you to write in your checking account number and your bank routing number, or you may staple a voided check to the form.
To initiate a payroll deduction installment agreement, submit Form 2159 (PDF), Payroll Deduction Agreement. Form 2159 must be completed by your employer. The IRS will set up a regular installment agreement for you and convert it to a payroll deduction agreement upon receipt of the completed form from your employer.
Please visit Payment Plans, Installment Agreements on the IRS.gov website for more information about installment agreements.
Responding to your IRS Notice
It is important to respond to an IRS notice. If you do not pay your tax liability in full or make an alternative payment arrangement, the IRS is entitled to take collection action. You may refer to Topic 201 for information about “The Collection Process.”
If you are unable to make any payment at this time, please have financial information available (e.g., pay stubs, lease or rental agreement, mortgage statements, car lease/loan, utilities) and call the appropriate number below to receive assistance:
- Individual taxpayers: 800-829-1040
- Business taxpayers: 800-829-4933
You have rights and protections throughout the collection process. If you would like information on arrangements to pay your bill, installment agreements, and what happens when you take no action to pay, refer to Publication 594 (PDF), The IRS Collection Process, and Publication 1 (PDF), Your Rights as a Taxpayer.
Source: Internal Revenue Service
Last reviewed: September 22, 2013