The IRS offers installment payment plans for people who don't have the financial ability to pay their tax debt in one lump sum. If you owe more money to the IRS than you can comfortably pay at once, you may qualify for an installment plan that will allow you to make several smaller payments instead. The IRS is required to negotiate with you for the best payment option so that you can eliminate your debt without undue hardship.

Find Out Exactly What You Owe

The first step in acquiring an IRS installment agreement is to file all of your back taxes. The IRS will not negotiate with you on payment plans unless your tax filings are entirely current. Once you have filed everything, you will know exactly how much you owe the IRS. This knowledge will help you create a possible payment plan that will fit your budget as you reduce the amount of money you owe the government. You should figure in the extra fees that the IRS will charge when you begin your installment plan. The fees vary depending on the length of your payment plan and the method you intend to use to pay your debt.

Do You Qualify for an Installment Agreement?

If you owe the IRS $25,000 or less, you can qualify for an installment agreement that extends as much as five years from the date you begin making payments. Some payment plans can include deferment periods during which you don't make any payments for a short time. When you create an installment plan you will have the opportunity to set your own monthly payment amount, but the IRS generally prefers that all debts be paid within the five year time limit. In extreme cases a taxpayer may qualify for a partial pay installment plan, which exempts you from a portion of your tax debt.

Fill Out the Appropriate Paperwork

Once you have finished filing your back taxes, you can file the IRS Form 9465 directly with the IRS agency nearest your home. Be prepared to write down the day of the month you would like to make payments and the minimum amount you are comfortably able to pay each month. It usually takes up to 30 days for the IRS to respond to an installment agreement request. Once the plan has been approved, be sure you make all of your payments on time so that the IRS will not revoke the agreement plan.