What Is an IRS Full Pay 120-Day Agreement?

An Internal Revenue Service (IRS) full pay agreement offers a structured extension for individuals who need more time than the standard tax deadline to pay. This arrangement, formally known as a short-term payment plan, grants taxpayers up to 180 additional days to pay their tax debt in full. It is designed as a solution for those facing a temporary financial shortfall.

This payment option provides a formal acknowledgment from the IRS that a taxpayer intends to pay, which can prevent the agency from initiating more severe collection actions. The agreement is for those confident in their ability to clear their entire balance within the 180-day window. It serves as a practical alternative to more complex and long-term payment arrangements.

Eligibility for a Short-Term Payment Plan

To qualify for a short-term payment plan, a taxpayer must meet specific criteria set by the IRS. The total amount owed, which includes the original tax, any assessed penalties, and accrued interest, cannot exceed $100,000. This threshold applies to the combined balance across all tax accounts. This plan is available for both individual and business taxpayers. A primary requirement is that you must have filed all legally required tax returns, as the IRS will not grant a payment plan to those who are not current on their filing duties.

Associated Costs and Conditions

While a short-term payment plan provides temporary relief, it does not stop the accumulation of penalties and interest. From the original tax due date until the balance is paid in full, interest will continue to compound daily on the outstanding tax. Additionally, a failure-to-pay penalty, typically 0.5% of the unpaid taxes per month, will also accrue during this period. These ongoing costs increase the total amount a taxpayer will ultimately pay.

A significant advantage of the short-term payment plan is the absence of a setup fee. Unlike long-term installment agreements that often come with application fees, this extension can be established at no additional cost. The primary condition is the taxpayer’s firm commitment to pay the entire liability within the agreed-upon timeframe.

How to Request a Short-Term Payment Plan

The most efficient method for individual taxpayers to request a payment extension is through the IRS’s Online Payment Agreement (OPA) tool. This self-service portal is available on the IRS website and allows individuals to apply for a payment plan. The online system provides immediate notification of whether the request is approved.

To use the OPA tool, you will need to authenticate your identity and provide specific information, including:

• Your name as it appears on your tax return
• A valid email address
• Your Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
• Your date of birth
• Your filing status from your most recent tax return

Businesses seeking a short-term payment plan must request it by phone. You can call the general IRS helpline and speak with a representative about setting up a plan. Before calling, it is helpful to have the same personal or business identification and tax return information ready that is required for the online application.