Applying for a 5-Year IRS Installment Plan
Understand the structured process for arranging a multi-year payment plan with the IRS to resolve an outstanding tax liability.
An Internal Revenue Service (IRS) installment agreement is a formal arrangement that allows taxpayers to pay their tax liability over an extended period instead of in a single lump sum. These payment plans provide a structured way to resolve tax debt while avoiding more severe collection actions.
Eligibility for an Installment Plan
To qualify for a long-term payment plan, taxpayers must meet specific criteria related to the amount owed. For a general online payment agreement, the total combined tax, penalties, and interest must be $50,000 or less. Some plans, like the Simple Installment Agreement, have a threshold of up to $50,000 in assessed tax only, not including later penalties and interest.
A taxpayer must also have filed all legally required tax returns. The IRS will not enter into an agreement with an individual or business that is not current on their filing duties.
These agreements generally do not require a detailed financial statement, such as Form 433-F, Collection Information Statement. The plan allows the balance to be paid over a period of up to 120 months, or before the Collection Statute Expiration Date (CSED), whichever is shorter. The CSED is typically 10 years from the date the tax was assessed, providing a final deadline for the IRS to collect the debt.
Information and Costs Associated with Applying
When applying for an installment agreement, you will need the following information:
- Your name and address as they appear on your most recent tax return
- A valid email address
- Your Social Security Number or Individual Taxpayer Identification Number
- The total balance you owe
A one-time setup fee is charged when the agreement is approved. For online applications, the fee is $31 for a direct debit plan and $130 for other payment methods. If applying by mail or phone, the fee is $107 for a direct debit plan and $225 for other methods. Low-income taxpayers may have this fee reduced to $43 or waived for direct debit plans. To qualify as low-income, your adjusted gross income must be at or below 250% of the federal poverty level.
Interest will continue to accrue on the unpaid tax balance until it is paid in full. The interest rate is determined quarterly, and for the second quarter of 2025, the annual rate is 7%, compounded daily. A failure-to-pay penalty also applies, but the rate is reduced from 0.5% to 0.25% per month once an installment agreement is in effect.
The Application Process
The most direct application method is the Online Payment Agreement (OPA) tool on the IRS website. You will need to log in or create an IRS Online Account to access the system. After logging in, you can enter your information and propose payment terms.
To submit a paper application, you must complete Form 9465, Installment Agreement Request. The form requires your personal information, the relevant tax year, and your proposed monthly payment amount. You can file this form with your tax return or mail it separately to the address listed in the instructions.
After submitting your application, the IRS will send a letter notifying you if your plan is approved or denied. If approved, the letter will outline the terms of your agreement, including the monthly payment amount and due date. You must make all payments on time and stay current with all future tax filing and payment obligations to keep the agreement in good standing.