Pay Within Six Months (Short-Term)

  • If the full payment can be made within 180 days (by mid-October), the first step is for the taxpayer to pay as much as possible by the April deadline.
  • The second step is for the taxpayer to contact the IRS at 800-829-1040 [best to call after the April deadline] or go online at irs.gov/payments/online-payment-agreement-application [must create an online account] and request a Short-term Payment Agreement of 30, 60, 90, 120, 150, or 180 days.
    • This agreement does not have fees. By contrast, an installment agreement (see below), which is longer-term, does have fees.
    • A short-term agreement stops the placement of the account into collection status.
  • If this option is feasible, discuss with the taxpayer they’ll make payments.
  • If the taxpayer expects to pay by mailing checks, print as many payment vouchers (bottom of Form 1040-V page 1) as the taxpayer wants, or
      • Printing multiple copies of the 1040-V in the PDF of the taxpayer’s return is preferable because this has taxpayer information. After printing these copies, line through the dollar amount on each form.
    • If the taxpayer prefers to pay directly, by credit card or from their bank account, direct the taxpayer to irs.gov/Payments; this also discusses how to pay by cash.
  • The taxpayer owes interest at the federal rate, which changes quarterly. (For 2024 the rate was 7% annually, compounded daily, for the first six months, but 8% for the last six months; 2025 rate is 7%.)

Pay by Credit Card

  • At irs.gov/Payments, with the option “Pay with Your Debit or Credit Card”, the taxpayer can pay some or all of their balance due using a credit card.
    • Processing fees are charged (and paid to third parties). For credit cards, the fee is approximately 2% of the payment; the exact fee varies by processing company.
    • Taxpayers can pay less than the full amount by credit card, as part of a short-term agreement (see above) or an installment agreement (see below).

Pay on an Installment Agreement

  • An installment agreement should be considered only if the taxpayer can’t pay their balance within six months.
    • The taxpayer can choose the monthly due date and payment amount. The taxpayer may arrange for direct debit from a bank account, on a recurring basis, or may pay in any of the ways (including cash) described at irs.gov/Payments.
    • Taxpayers owes interest and a late-payment penalty of 0.25% of the balance due each month.
  • There is a one-time set-up fee, unless the agreement is initiated as part of an e-filed tax return (see next paragraph).
    • $31 if the agreement is done online, with payments to be made by direct debit from a bank account.
    • $107 if the agreement is done by phone or in person, but with payments to be made by direct debit from a bank account.
    • $149 if the agreement is done online, with payments to be made by check.
    • $225 if the agreement is done by phone or in person, with payments to be made by check.
    • $43, regardless of how the agreement is made or how payments are made, by filing Form 13844 (not available on TaxSlayer), which is for low-income households, defined as those below 250% of the federal poverty line (page H-24 of  Pub 4012 has poverty line amounts for various-sized households). 
  • To request an initial installment agreement, the taxpayer has four choices:
    • (1) With the tax return: go to the Form 9465 - Installment Agreement Request page [Federal Section > Miscellaneous Forms > Installment Agreement].
      • The IRS adds the set-up fee amount to the amount owed from the tax return, in calculating the total balance due; the fee is not collected if Form 9465 is electronically filed as part of the tax return.
      • The “amount of payment being made with this request” must equal the direct debit amount in Bank Account page of the E-file section.
      • If the monthly amount that the taxpayer can pay is less than 1/72nd of the amount owed, then the taxpayer must file Form 433-F, Collection Information Statement, with the return. TaxSlayer does not include this form, so it must be printed and filled out separately, and the return must be paper filed.
    • (2) Online at irs.gov/payments/online-payment-agreement-application. This is the lowest-cost way to request installment payments, other than including the form with an e-filed tax return.
    • (3) By mailing a Form 9465 to the IRS (to be sent to the IRS address where paper returns are sent; see page iv).
    • (4) By phone (1-800-829-1040) or in person at an IRS office (call 844-545-5640 to schedule an appointment [best to call after the spring filing deadline].
  • While on an installment agreement, the taxpayer may amend the agreement, including adding additional years, if necessary, on irs.gov, or by calling the IRS; the fee for restructuring is $89.

Other Options 

On rare occasions, a taxpayer has had serious problems with the IRS or is very deeply in debt. In that case, one or more of the following may be appropriate.

  • An offer in compromise is an agreement between a taxpayer and the IRS that settles a tax debt for less than the full amount owed, because paying the full amount would cause a financial hardship, even when paying through installment payments. The Form 656 Booklet explains how the process works. The IRS website has an Offer In Compromise Pre-Qualifier online tool that does not require any personally-identifiable information to determine if the taxpayer appears eligible for this option.
  • Low Income Tax Clinics such as Legal Aid Society provide pro bono representation on behalf of low-income taxpayers in tax disputes with the IRS, including audits, appeals, collection matters, and federal tax litigation.
    • Generally, the taxpayer’s income must be below 250% of the Federal Poverty Line, and the amount in dispute must be less than $50,000. 
  • The IRS Taxpayer Advocate Service can help taxpayers who have tried to resolve their tax problem through normal IRS channels and have gotten nowhere, or believe an IRS procedure isn't working as it should, or need to have the IRS move faster than normal because of a financial difficulty, such as getting a refund.

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