Paying Off Tax Debt? Use the IRS’s Simple Payment Plan

People incur tax debt for a variety of reasons, but the IRS has many different options to help you get back on track. Approximately 90% of people with tax debt qualify for the Simple Payment plan, which gives you up to 10 years to repay up to $50,000 in IRS tax debt.

Owing the IRS money isn’t fun. Tax debt can feel incredibly overwhelming, especially when you need extra time to pay your balance without drowning in paperwork or jumping through complicated hoops. The Simple Payment Plan is designed to help people pay their tax debts over time without extensive paperwork (and maybe even a little less stress).

To get help now, contact us today, or keep reading for an overview of this IRS payment plan.

Key takeaways

• Simple payment plan – IRS monthly payment plan for up to $50,000 in individual tax debt.
• Eligibility – Up to date with filing returns and able to pay off the balance within 10 years.
• How to apply – Online, by mail, or call the IRS.

What Is the IRS Simple Payment Plan?

The IRS simple payment plan is an installment agreement that allows taxpayers to pay IRS tax debt in monthly installments. This payment plan gives you up to 10 years to repay up to $50,000 in individual tax debt (or until the Collection Statute Expiration Date if sooner). Additional requirements include:

• Must be up to date on filing returns – generally must have the last five years filed.
• Paid all estimated quarterly taxes for the current year – you also must be up to date on payroll deposits if you own a business with employees.
• Not in an active bankruptcy – if filing bankruptcy, you may apply for this plan on taxes that remain after the filing.

Additionally, while you’re on the plan, you must file all returns on time and not incur any new tax debt.

The primary purpose of the Simple Payment Plan is to offer a less burdensome way for eligible people to pay their tax debts over time. Launched in March 2025 to replace the Streamlined Installment Agreement, this simple IRS installment agreement offers more flexibility and better terms.

Simple payment plan vs other IRS installment agreements

The IRS Simple Payment Plan differs from other traditional (and previous) processes in several ways:

• • No mandatory direct debit or payroll deduction: You no longer have to set up a direct debit installment agreement (DDIA) or payroll deduction installment agreement (PDIA) to qualify, even if you owe over $25,000.
  • Flexible payment calculation: The IRS tossed the old method of dividing the balance by 72 months to calculate minimum monthly payments. Now, the IRS uses the IAT Compliance Suite Payment Calculator to determine payments and ensure the debt—including penalties and interest—is paid in 120 months (10 years) or by the collection statute expiration date if sooner.
  • No collection information statement (CIS): You don’t have to provide a detailed financial statement, which shrinks your paperwork burden.
  • No management approval: The IRS typically doesn’t require management to sign off on the Simple Payment Plan, which can expedite the approval process.
  • No Notice of Federal Tax Lien (NFTL) determination: No automatic lien filing if you establish a repayment plan before the IRS files an NFTL.

Streamlined payment plan for business taxes

The simple payment plan only replaced the streamlined payment plan for individuals. Businesses can take up to 72 months to repay taxes with a streamlined installment agreement if they:

• • • Are still operating and owe up to $25,000 in non-payroll tax debt.
    • Are no longer operating and owe up to $25,000 in any type of business tax debt (for example, corporate income tax and payroll tax).
    • Are an out-of-business sole prop that owes up to $50,000 in business tax debt.

Note that sole proprietorships that do not have employees can apply for the simple payment plan or other IRS installment agreements as if they are individuals.

Which IRS installment agreement is right for you?

If you’re not sure whether the Simple Payment Plan is the right plan for you, check out this chart of other IRS monthly payment options. Seattle Legal Services PLLC also offers more details on other IRS repayment plans and installment agreements.

Who Qualifies for the IRS Simple Payment Plan?

If the total amount you owe is $50,000 or less in assessed tax, interest, and penalties, you may qualify. There are a few other caveats.

• • • You must be current with your tax return filings.
    • You cannot be in an open enforcement action (e.g., a levy or wage garnishment).
    • You can’t already have an existing installment agreement in place.
    • You file your tax returns using your Social Security Number, or you’re a sole proprietor who does not operate under an Employer Identification Number (EIN).
    • You can pay off the outstanding balance before the CSED.

How to apply for the IRS Simple Payment Plan

It’s very easy to apply for the IRS Simple Payment Plan. Start by logging into your IRS Online account. If you don’t have an account, you’ll need to create one. The online account allows you to:

• • • Look at your tax records
    • View past and make new payments
    • View or create payment plans
    • Check your account balance
    • Manage profile preferences
    • View authorization from tax professionals

Setting up a new IRS account

New users are required to provide photo identification to verify their identity. You can use your driver’s license, state ID card, or passport as identification. You also need an email address, your SSN, and a smartphone so you can:

• • • Receive a verification code via email
    • Take and upload a video selfie to confirm your identity
    • Upload pictures of your identifying documents

If you apply online using a direct debit installment agreement (DDIA), you’ll pay a setup fee of $22 ($107 if you set up the plan by mail or phone using Form 9465). If you don’t use direct debit, setting up the plan online costs $69, or $178 if you choose to do it in person, by phone, or by regular mail. Lower-income taxpayers may be eligible for a reduced fee.

Once you’ve created your account, navigate to the “View or create payment plans” option and choose Simple Payment Plan. Follow the prompts of the online payment agreement tool. You’ll need:

• • • Your name as it appears on your most recently filed tax return
    • The address used on your most recently filed tax return
    • Your date of birth
    • Your email address
    • Your Social Security Number (or EIN)
    • Your filing status
    • The balance due
    • Your financial account number, mobile phone number, or an activation code you received by mail

It helps to have your preferred payment method handy (like your bank’s routing and account numbers or debit card account) so you can set up the withdrawals at the same time. The IRS accepts payments via:

• • • Direct pay: Monthly payments from your checking or savings account.
    • IRS account online: Monthly payments are made electronically online.
    • By phone: Monthly payments are made via the Electronic Federal Tax Payment System (EFTPS), which requires creating an additional account.
    • Through the mail: Monthly payments made by check, money order, or debit/credit card.

Please note that the IRS charges additional fees if payment is made by card.

IRS Simple Payment Plan FAQs

Can I set up the plan without creating an IRS online account?

Yes, if you apply through the mail or over the phone. However, if you want to apply online, you must have an IRS online account.

What happens if I get a tax refund in a future year before I’ve paid off this balance?

Any future tax refunds will be applied to the balance until it’s paid in full. The IRS can also take your state tax refunds.

Do tax penalties and interest continue to accrue while I pay off the balance?

Yes. The IRS applies a late payment penalty of 0.25% per month, plus interest that adjusts quarterly at the prime rate plus three points. So if you can pay it off early, you’ll pay less interest and fewer penalties.

What happens if I miss a payment?

If you miss a payment, you risk having the agreement cancelled. The IRS will send you a notice and give you about a month to make up the missed payment. If you don’t cure the default, your plan will be terminated, and the agency can demand payment in full.

Will the IRS file a lien if I’m under the Simple Payment Plan?

No, not if you’ve set up the agreement before the IRS has filed a Notice of Federal Tax lien. If you set up payments after the lien has been filed, the IRS will generally only withdraw it if you owe less than $25,000, set up payments for less than five years, and make three monthly payments on time.

Can I change my monthly payment amount later?

If you can’t afford your payment plan, you can change the monthly payment amount as long as it still pays off the balance within 10 years or by the CSED. You can always pay more each month to settle your balance earlier.

How can I make payments?

You can pay via direct debit, payroll deduction, over the phone, or by mail. Credit card payments incur a service charge, but bank transfers and checks do not.

Could my Simple Payment Plan agreement be canceled?

If you incur new tax debt or don’t file your returns, the IRS can modify or consider your agreement to be in default and terminate your agreement. However, in many cases, the agency will let you roll new tax debt into your existing payment plan as long as you owe under $50,000.

What if I don’t qualify for a Simple Payment Plan?

There are other options, such as non-streamlined installation agreements for people who owe more than $50,000 in back taxes or have complex tax situations.

What if I can’t afford to repay my back taxes?

You should consult with a law firm, like Seattle Legal Services PLLC, that specializes in tax resolution. We can help you explore options like an offer in compromise, where you settle tax debt for less than owed, or currently not collectible (CNC), where the IRS stops all collection actions until your finances improve.

Get Help With IRS Tax Debt Now

No one wants to feel overwhelmed by tax debt. Solutions like the IRS Simple Payment Plan are designed to help make your situation more manageable. But you don’t have to navigate the tax laws or IRS system alone. If you’re struggling with tax debt, confused about your options, or seeking professional guidance to make the best choice, it’s okay to ask for help.

For personalized advice and assistance with the IRS payment plan for individuals—or any other tax strategy—talk to the team at Seattle Legal Services PLLC.

How to Resolve Unpaid Taxes With the IRS

You may also want to explore these IRS resources as you look for ways to resolve your IRS back taxes:

• • • IRS Online Account portal
    • IRS Simple Payment Plan
    • Get help with tax debt
    • IRS Payment Portal

Sources:

https://www.irs.gov/payments/simple-payment-plans-for-individual-taxpayers