IRS Simple Payment Plan for Individual Taxpayers

Taxpayers who owe up to $50,000 in tax debt may qualify for an IRS Simple Payment Plan. To qualify, you must be up to date on filing tax returns and making quarterly estimated payments if applicable. The simple option lets you spread payments out over a period of up to 10 years. 

Learn more now or use TaxCure to connect with a tax pro who can help you decide if this is the right option for you. 

Key takeaways

• Simple payment plan – Take up to 10 years to pay up to $50,000 in tax debt.
• Requirements – Be up to date on tax return filing and only owe individual tax debt.
• How to apply – Apply online or by phone, mail, or in person.

What Is the IRS Simple Payment Plan?

The IRS Simple Payment Plan is the easiest way for taxpayers to set up payments on tax debt. As long as you owe $50,000 or less in individual income tax debt, you can spread your payments over a 10-year term. Additional requirements include filing the last five years of returns, being up to date on estimated quarterly tax payments (if required for your situation), and not defaulting on a payment plan in the last two years. 

How to Apply

You can apply for a Simple Payment Plan online through your IRS online account – if you don't have an account, you'll need to verify your identity with ID.me, which requires a smartphone and a camera. Otherwise, you can apply by mail using Form 9465 or over the phone. 

Requirements – Who Qualifies for a Simple Payment Plan?

To qualify for a simple payment plan, you must be an individual who owes less than $50,000 and is up to date on filing requirements. Here's a deeper look at the requirement criteria:

• Tax debt – owe up to $50,000 in tax, penalties, and interest.
• Type of tax – individual income tax debt.
• Repayment term – up to 10 years or until the collection statute expiration date, which is 10 years after the tax was assessed.
• Filing requirement - be up to date on filing returns (if you're behind, that generally means filing the last six years of tax returns). 
• Payment requirement – pay all quarterly estimated taxes if applicable. 
• Compliance – do not incur any new tax debt, but in some cases, the IRS may let you roll new balances into your existing payment plan as long as the balance due stays under $50,000.

According to the IRS, about 90% of individuals who owe IRS tax debt can qualify for this payment plan. If you've recently incurred tax debt or believe that you're going to owe when you file your next return, you may want to consider this option. 

How to Make Payments on the Simple Payment Plan

For most taxpayers, the easiest option is to set up direct debit payments. You can do that when you request the payment plan online or using Form 433-D. However, you are not required to use direct debit. If desired, you can pay manually every month by signing into your online account, using IRS direct pay, on the EFTPS website, or through the mail. 

Cost of Setting Up a Simple Payment Plan. 

If you set up the payment plan online and select direct debit, the fee is just $22. Otherwise, fees are as follows:

• Set up online and pay manually (not with direct debit) – $69
• Apply by phone, mail, or in-person and set up direct debit – $107
• Apply by phone, mail, or in-person and pay manually – $178
• Low-income and set up direct debit – no fee
• Low-income and pay manually – $43, which will be refunded at the end of the payment plan

The IRS uses the set-up fees to cover the cost of administering payment plans. Generally, to qualify for the low-income fees, your income must be 250% of the poverty line.

Application Review Process

As long as you meet the requirements outlined above, the IRS will approve your request for the payment plan. If you apply online, acceptance is instant. If you apply by mail, you may want to make monthly payments manually to show good faith until you get a confirmation letter from the IRS noting that you're on a payment plan. If the IRS rejects your request for a payment plan, you can appeal.

What to Expect When You're on a Simple Payment Plan

Interest and penalties will continue to accrue on your account while you make payments. The interest on IRS payment plans adjusts quarterly, and it's the federal short-term rate plus three points. The failure-to-pay penalty is on top of the interest at a rate of 0.25% per month, but this penalty stops accruing once it reaches 25% of your original unpaid tax liability. The IRS will not file a tax lien if you set up this payment plan before they file a Notice of Federal Tax Lien.

Generally, the IRS doesn't send out monthly payment reminders. If paying by direct debit, make sure the funds are available in your bank account, and if paying manually, don't forget to pay on time every month. If you miss a monthly payment, the IRS will typically send a CP523 notice and give you one month to make up the payment. At this point, your installment agreement is in default, and if you don't make up the payment, the IRS will terminate the agreement and demand payment in full. 

You're also expected to stay compliant with filing and payment obligations. If you don't file a return or incur new tax debt, the IRS has the right to terminate your installment agreement. However, in practice, the IRS is often more lenient than that. Although you cannot have two payment plans, you may be able to roll a new tax debt into your existing payment plan as long as your total amount owed does not exceed $50,000. 

While you're making payments, the IRS may send out an annual notice (often a CP71) that outlines what you owe in tax, interest, and penalties. These letters can get confusing because they don't always acknowledge that you're on a payment plan. 

What If I Don't Qualify for a Simple Payment Plan?

Luckily, the Simple Payment Plan is not the only installment agreement that the IRS offers. If you don't qualify for this option, you may want to consider another option. The best choice depends on the situation. 

If you owe more than $50,000

If you owe more than $50,000, look into the IRS's non-streamlined installment agreement. You must apply through the mail or over the phone, and you must provide the IRS with a collection information statement detailing all of your income, assets, expenses, and debts. This type of payment plan is sometimes called financially verified.

Alternative options: make a payment to get your balance below $50,000 and then apply for a simple payment plan. If possible, ask for penalty abatement to see if waiving penalties gets your balance under the threshold. If you can pay off the balance in 180 days, then you can request a short-term payment plan online for up to $100,000 in tax debt.

If you can't pay off the balance within 10 years

Your minimum monthly payments must be enough to pay off the tax debt within 10 years or by the collection expiration date if sooner. If that's not possible, you may qualify for a partial payment installment agreement. That allows you to make monthly payments until the collection statute expiration date, and at that point, any remaining tax debt expires. You must provide a collection information statement when you apply, and the IRS will check your financial situation every two years to make sure you still qualify. 

Alternative options: consider applying for an offer in compromise. Make a lump sum payment or up to 24 monthly payments based on the equity in your assets and your disposable income. If you can't afford anything at all, ask the IRS to make your account currently non collectible – your balance will continue to grow, but the IRS won't take any collection actions against you. Both programs require an extensive financial disclosure. 

Owe other types of taxes

If you owe business taxes, you may want to consider one of these payment plans:

• In-business express installment agreement - Take up to two years to pay off up to $25,000 in payroll tax liabilities. 
• Streamlined installment agreement - Take up to six years to pay up to $25,000 in non-payroll business tax debt if you're still operating. If no longer operating, you can take up to six years to pay up to $25,000 in any type of business tax debt (up to $50,000 for out-of-business sole props).

Alternative options: If you don't meet the requirements for the above two options, the IRS may approve a payment plan, but you will need to provide extensive financial details about your business. 

FAQs about the IRS Simple Payment Plan

Do I have to take 10 years to pay back taxes?

No, you can make payments over a shorter term if desired. In fact, the IRS encourages taxpayers to pay off their tax liabilities as quickly as they can. Making larger monthly payments so that you pay off the debt in fewer than 10 years reduces the total interest and penalties incurred on the account. 

What if I owe less than $10,000?

If you owe less than $10,000, you may qualify for a guaranteed installment agreement. This option gives you up to three years to make payments, but you must be up to date on filing requirements and not have a history of defaulting on payment plans.

Will the IRS file a tax lien if I set up a simple payment plan?

No, the IRS will not file a tax lien if you set up a simple payment plan before they do so. To avoid a tax lien, set up payments as soon as possible. The IRS can file a tax lien anytime you owe the agency money, and they don't have to notify you in advance. 

Will the IRS withdraw a tax lien if I set up payments?

If the IRS has already filed a federal tax lien, setting up a simple payment plan will not eliminate the lien. However, if you set up payments with direct debit that pay off the tax debt in five years, the IRS may withdraw the public record of the lien once you make three monthly payments. 

What if the IRS is levying my assets or garnishing my wages?

Unfortunately, setting up a simple payment plan will not stop an active wage garnishment or asset levy. You must set up payments proactively if you want to avoid involuntary collection actions. However, if you're facing an IRS levy, you may be able to stop it by proving error, procedural mistakes, or extreme financial hardship.

Can I make changes to the simple payment plan?

Yes, you can make changes such as the date of your monthly payment, the bank account used for payments, or the amount of your monthly payment online or over the phone.

What if the IRS won't let me set up a simple payment plan?

The IRS may deny your request if you have unfiled returns, unpaid quarterly taxes, a history of noncompliance, or have defaulted on a payment plan in the past. In this case, you may want to consult with a tax pro who can help you get back into compliance by filing back taxes and figuring out why you owe, and taking steps to avoid that in the future. Working with a tax pro is the most effective way to ensure that you avoid unwanted collection actions. 

How long has the Simple Payment Plan been available?

The IRS announced the Simple Payment Plan in 2025. Prior to this option, taxpayers could only take up to six years to pay off $50,000 in tax debt, and if they needed longer, they were required to file a collection information statement. 

Get Help With Unpaid Taxes Now

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