A payment plan is an agreement with the IRS to pay the taxes you owe within an extended timeframe. If you qualify for a short-term payment plan you will not be liable for a user fee. Not paying your taxes when they are due may cause the filing of a Notice of Federal Tax Lien and/or an IRS levy action.

Are installment agreements tax deductible?

NO – Unfortunately, the answer to this is no. Unlike tax breaks that you might get on your mortgage interest and property taxes, you are not allowed to deduct the interest or penalties that are part of an IRS installment agreement. However, any prepayments made to the IRS will reduce your overall tax bill.

How to apply for an IRS installment agreement?

For businesses, balances over $10,000 must be paid by Direct Debit. Apply online through the Online Payment Agreement tool or apply by phone, mail, or in-person at an IRS walk-in office by submitting Form 9465, Installment Agreement Request.

What are the fees for an installment agreement?

Apply (revise) by phone, mail or in-person: $43 fee, which may be reimbursed if certain conditions are met. $0 fee for changes made to existing Direct Debit installment agreements. Note: If making a debit/credit card payment, processing fees apply. Processing fees go to a payment processor and limits apply.

When to apply for a long term payment agreement?

Long-term payment plan (installment agreement): You have filed all required returns and owe $25,000 or less in combined tax, penalties, and interest. If you are a sole proprietor or independent contractor, apply for a payment plan as an individual.

Where to find information on federal tax lien, installment?

While the IRS is resuming critical tax administration responsibilities, it will also factor in the wide-ranging impact of COVID-19 on taxpayers. Visit to find information about making payments and the options available, including those below, for taxpayers who can’t pay the amount they owe in full.