First: don't ignore the bill
Owing the IRS is common and fixable — but penalties and interest keep growing while you wait. Filing on time (even if you can't pay) avoids the failure-to-file penalty, which is much bigger than the failure-to-pay penalty. Then pick one of the paths below.
Option 1: Installment agreement (payment plan)
You pay the full amount over time in monthly installments. The IRS offers:
- Short-term plan (≤180 days): pay within about 6 months. Usually no setup fee.
- Long-term installment agreement: monthly payments over years. There's a setup fee that varies by how you apply and how you pay (online vs. phone/mail, direct debit vs. other methods). [VERIFY] Fees change — confirm current setup fees at irs.gov before applying.
How to apply
Note: interest and the failure-to-pay penalty continue (at reduced rates) until the balance is zero — a plan stops collections, not the clock.
Option 2: Offer in Compromise (settle for less)
An Offer in Compromise (OIC) lets you settle your tax debt for less than the full amount — but the IRS accepts only a fraction of applications. You must show that paying in full would cause economic hardship or that the amount is genuinely uncollectible.
- There's an application fee plus an initial payment with the application (waived for low-income applicants). [VERIFY]
- The IRS evaluates your income, expenses, assets, and future earning potential with a formula — use the OIC pre-qualifier tool on irs.gov before paying anyone.
- Beware "tax relief" companies promising pennies-on-the-dollar settlements for upfront fees. Many charge thousands for applications the IRS would have rejected — or that you could file yourself.
Which fits you?
| Your situation | Likely fit |
|---|---|
| You can pay in full within ~6 months | Short-term plan (no setup fee) |
| You need years, but can afford monthly payments | Long-term installment agreement |
| Paying in full would leave you unable to meet basic living expenses | Explore Offer in Compromise |
| You disagree with the amount owed | Dispute/appeal first — don't agree to pay a wrong bill |
Low income? Ask about currently-not-collectible status and fee waivers — the IRS has hardship provisions many people miss.
- IRS — Payment plans: https://www.irs.gov/payments/payment-plans-installment-agreements
- IRS — Offer in Compromise: https://www.irs.gov/payments/offer-in-compromise
We summarize these sources in our own words. Always confirm critical details (fees, dates, eligibility) on the official site before acting.