How to Make Payments on an IRS Installment Agreement

What an IRS installment agreement payment is

An IRS installment agreement is a plan that lets you pay your tax debt in monthly chunks instead of all at once. When you set up an agreement, the IRS tells you how much to pay each month and when it's due. You then send that payment to the IRS on the schedule you agreed to. The agreement stays in place until your debt is paid off, which can take several years depending on how much you owe and what monthly amount you choose.

The IRS offers different types of installment agreements — some are short-term (under 120 days), some are long-term (several years), and some are based on what you can actually afford to pay. The payment method and where you send your money depends on which type of agreement you have and how you choose to pay.

Key Takeaways

You can pay an installment agreement by check, money order, electronic funds withdrawal, credit card, or through the IRS payment portal at IRS.gov.
Your payment due date is set when you establish the agreement, and you should pay by that date each month to avoid penalties and interest.
The IRS charges a setup fee when you create an installment agreement, and interest and penalties continue to accrue on your unpaid balance until it is fully paid.
If you miss a payment or your agreement is defaulted, the IRS can take collection action, so contacting them when ready if you cannot pay is important.
You can change your payment amount or payment method by contacting the IRS, though some changes may require a new agreement with an additional fee.

Where to send your installment agreement payment

The address where you send your payment depends on your state and the type of payment you are making. If you are paying by check or money order, the IRS publishes a list of payment addresses on IRS.gov — search for "where to file" and select your state. Write your tax identification number (either your Social Security number or employer identification number) and the tax year on your check or money order so the IRS can match it to your account.

If you set up your agreement through the IRS website or by phone, you should have received a notice that includes your specific payment address and due date. Keep that notice handy. Do not mail payments to the IRS office that handles your case — use only the address listed in your agreement paperwork.

Electronic payment methods for installment agreements

The fastest and most reliable way to pay is through the IRS website at IRS.gov. You can set up a one-time payment or a recurring monthly payment using your bank account (electronic funds withdrawal). To do this, go to IRS.gov, select "Make a Payment," and choose the installment agreement option. You will need your tax identification number, the tax year, and your bank routing and account numbers.

You can also pay by credit or debit card through approved third-party processors listed on IRS.gov. These processors charge a convenience fee (usually 1.87% to 2.35% of your payment), so the total amount charged to your card will be higher than the payment itself. Electronic funds withdrawal through your bank account has no convenience fee.

If you prefer phone payments, you can call the IRS at the number on your installment agreement notice and make a payment over the phone using your bank account or card. The IRS also accepts payments through its mobile app, which works the same way as the website.

Payment timing and what happens if you miss a payment

Your payment is due on the date specified in your installment agreement notice — usually the 15th or 25th of each month, though the exact date depends on your agreement. The IRS considers a payment on time if it arrives by that date. If you are mailing a check, mail it several days early to account for delivery time.

If you miss a payment, the IRS will send you a notice. Missing one payment does not automatically end your agreement, but if you miss three payments in a row, the IRS can default your agreement and demand the full remaining balance when ready. If you know you cannot make a payment, contact the IRS before the due date — you may be able to adjust your payment amount or get a short extension.

Interest and penalties continue to accrue on your unpaid balance even while you are making installment payments. The longer your agreement lasts, the more interest you will pay overall. This is why paying more than the minimum each month, when you can, reduces the total amount you owe.

Fees and costs associated with installment agreements

The IRS charges a setup fee when you establish an installment agreement. The amount varies depending on how you set up the agreement. If you set it up online or by phone using electronic funds withdrawal, the fee is lower than if you set it up by mail or in person. As of 2024, online setup fees range from about $31 to $225 depending on your income level and the type of agreement.

In addition to the setup fee, you pay interest on your unpaid tax balance at a rate set by the IRS each quarter. You also pay a failure-to-pay penalty, which is typically 0.5% of your unpaid taxes per month. These costs are added to your balance, so your monthly payment covers both the original tax debt and these growing charges.

Changing your payment amount or method

If your financial situation changes and you can no longer afford your current monthly payment, you can request a modification. Contact the IRS using the phone number on your installment agreement notice and explain your situation. The IRS may lower your payment amount, though this will extend how long your agreement lasts and increase the total interest you pay.

You can change your payment method at any time — for example, switching from mailing checks to electronic funds withdrawal. You do not need permission to do this; straightforward start using the new method. However, if you want to change the payment amount, the IRS may require you to set up a new agreement, which comes with another setup fee.

If your income increases significantly, you can also request to pay more each month to finish your agreement faster and pay less interest overall. The IRS will not object to this.

What to do if you cannot make a payment

If you are about to miss a payment, contact the IRS when ready rather than waiting for a notice. Call the number on your agreement paperwork and explain your situation. The IRS may offer temporary relief, such as a short delay or a reduced payment for a few months, though this is not may provide.

If your agreement is defaulted because you missed three payments, you still have options. The IRS may allow you to reinstate the agreement if you catch up on the missed payments and demonstrate that you can resume making regular payments. You can also request a new agreement with different terms. Contact the IRS as soon as possible after default — the longer you wait, the more likely the IRS is to pursue other collection methods like wage garnishment or bank levy.

Frequently Asked Questions

Can I pay my installment agreement early without a penalty?

Yes. You can pay off your installment agreement at any time without penalty. Paying early reduces the amount of interest that will accrue on your remaining balance. There is no fee or disadvantage to paying more than your monthly minimum or paying off the entire balance early.

What if I set up automatic payments but my bank account does not have enough money?

The IRS will attempt to withdraw the payment on the due date. If your account does not have sufficient funds, the withdrawal will fail. The IRS will send you a notice, and you will be considered late on that payment. Contact the IRS when ready to make the payment manually and discuss whether your payment amount needs to be adjusted.

Do I need to make a payment if I am waiting for a refund?

Yes. Your installment agreement payment is separate from any refund you may receive. You must continue making your monthly payments on schedule. If you receive a refund, the IRS may explore it to your installment agreement balance automatically, reducing what you owe.

Can I change my payment due date?

The IRS typically allows you to choose a payment date when you set up your agreement, usually the 15th or 25th of the month. If you need to change it after the agreement is in place, contact the IRS. Some changes can be made over the phone, while others may require a new agreement with an additional fee.

What happens to my installment agreement if I move?

Your agreement stays in effect. You do not need to notify the IRS of a move for payment purposes — the IRS will continue to process your payments regardless of your address. However, you should update your address with the IRS so you receive notices at your new location. You can do this through your IRS online account or by calling the IRS.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.