IRS Highlights Payment Plan Options and Online Payment Agreement, FS-2023-15

The IRS has highlighted numerous payment plan options for taxpayers who cannot pay taxes in one go. Further, the IRS has advised taxpayers to use the Online Payment Agreement (OPA) to set it up to pay off an outstanding balance over time. Once taxpayers complete the online application, they would receive immediate notification of whether the IRS has approved their payment plan. Qualified taxpayers with existing payment plans could also use the OPA to make changes to their plans that include revising payment dates, payment amounts or bank information for direct debit payments.

Moreover, individual taxpayers’ online payment plan options include:

Short-term payment plans: For taxpayers who have a total balance less than $100,000 in combined tax, penalties and interest. This plan gives them an extra 180 days to pay the balance in full.
Long-term payment plan: For taxpayers who have a total balance less than $50,000 in combined tax, penalties and interest. They can make monthly payments for up to 72 months. Taxpayers are encouraged to set up plan payments using direct debit (automatic bank withdraw), which eliminates the need to send a payment each month, saves postage costs, and reduces the chance of default. The IRS requires direct debit for balances between $25,000 and $50,000.

Business taxpayers’ online payment plan options include:

Long-term payment plan: For business taxpayers who have a total balance less than $25,000 in combined tax, penalties and interest from the current and preceding tax year. They can make monthly payments for up to 24 months. Taxpayers can choose to set up payments using direct debit (automatic bank withdraw) and requires it on balances between $10,000 and $25,000.

Taxpayers already working with the IRS:

Individuals and out-of-business sole proprietors who are already working with the IRS to resolve a tax issue, and who owe $250,000 or less, have the option to propose a monthly payment that will pay the balance over the length of the collection statute – usually 10 years. These payment plans don’t require a financial statement, but a determination for the filing of a notice of federal tax lien still applies.