Rev. date: 07/2006
There are various options for payment of an outstanding federal income tax liability. 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 must file immediately even if you cannot pay your balance in full.
You may pay your tax liability by sending a check or money order, made out to "United States Treasury." You may pay by transferring money electronically from your bank account. The Electronic Payment Options
page on the IRS.gov website explains how to make an electronic payment. You may also pay by credit card by calling 888-872-9829, 888-729-1040, or 888-972-9829, or by debit card by calling 866-472-9829. A convenience fee paid to a service provider, not the IRS, may be charged for electronic payments from your bank account or for a payment by credit card. 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 Tax 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 card
cash advance. The interest rate and any applicable fees charged by a bank or credit card 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 a short amount of additional time, up to 120 days, to pay in full. No fee will be charged for entering this type of payment arrangement.
An installment agreement
would allow 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
- Electronic Federal Tax Payment System (EFTPS)
- Payment by credit card via phone or Internet, or
- Online Payment Agreement (OPA)
A one-time installment agreement fee of $105.00
will be charged when you enter into an installment agreement unless you choose to pay through a Direct Debit from your bank account, in which case the fee is $52.00. Taxpayers with income at or below 250% of the Department of Health and Human Services poverty guidelines can apply to pay a reduced user fee of $43.00. You can request the reduced fee using Form 13844
, Application For Reduced User Fee For Installment Agreements
Please 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 can pay your balance in a shorter period of time, you can request a short amount of additional time, up to 120 days, to pay in full. This payment arrangement does not carry a fee.
If you decide on entering into an installment agreement, your monthly payment should be based on your ability to pay and should be an amount that can be paid each month to avoid defaulting.
- If you are not able to provide full payment when you file your tax return, you can 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, 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 can request an installment agreement using the Online Payment Agreement (OPA) application on the IRS.gov website, or you may submit Form 9465, 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 will need to specify the amount you can pay and the day (1st-28th) you wish to make your payment each month. The IRS will expect to receive the payment ON the day 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, denied or more information is needed.
Direct debit or payroll deduction installment agreements provide an opportunity to make timely payments automatically and reduce the possibility of default. For a direct debit installment agreement you will need to 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
, 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
, 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.
It is important not to ignore 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 Tax 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 making arrangements to pay your bill, installment agreements, and what happens when you take no action to pay, refer to Publication 594
, The IRS Collection Process
, and Publication 1
, Your Rights as a Taxpayer