Form 9465, Installment Agreement Request, is how an individual asks the IRS to accept payment of a tax balance in monthly installments. This article explains the types of payment plans, the current user fees, how penalties and interest continue to apply, and how California’s separate program works.
What Is Form 9465?
Form 9465 requests a monthly installment agreement when a taxpayer cannot pay the full balance shown on a return or notice. According to the IRS instructions, it is used by individuals who owe income tax, who are or may be responsible for a trust fund recovery penalty, or who owe employment taxes from a sole proprietorship that is no longer operating. A business that is still operating and owes employment or unemployment taxes requests an agreement by phone instead.
Individuals who owe $50,000 or less in combined tax, penalties, and interest, and who have filed all required returns, can generally apply online through the IRS Online Payment Agreement application instead of filing Form 9465, at a lower user fee.
Types of Payment Plans
Short-term payment plan: for balances that can be paid in full within 180 days. There is no setup fee. Individuals who owe less than $100,000 can apply online.
Guaranteed installment agreement: available if the tax owed is not more than $10,000; during the past five tax years the taxpayer timely filed all income tax returns, paid the tax due, and did not enter into an installment agreement for income tax; the taxpayer agrees to pay in full within three years; and the taxpayer is financially unable to pay in full when due.
Streamlined installment agreement: generally available for assessed balances of $25,000 or less, or $25,001 to $50,000 for individuals who agree to pay by direct debit or payroll deduction. The balance must be paid within 72 months or by the collection statute expiration date, whichever comes first. A financial statement is generally not required.
Partial payment installment agreement: an agreement that will not pay the full balance before the collection statute expires. It requires a financial statement and supporting information and is subject to periodic review.
Balances over $50,000 generally require a financial statement, such as Form 433-F, Collection Information Statement.
User Fees
According to the IRS payment plans page (updated March 2026), the setup fees for a long-term payment plan are:
Direct debit: $29 if applying online, or $107 by phone, mail, or in person.
Other payment methods: $69 if applying online, or $178 by phone, mail, or in person.
For low-income taxpayers (adjusted gross income at or below 250% of the federal poverty guidelines), the fee is waived for a direct debit agreement. A low-income taxpayer who cannot use direct debit pays a reduced $43 fee, which may be reimbursed when the agreement is completed.
Penalties and Interest Continue
An installment agreement does not stop interest. Interest continues to accrue on the unpaid balance, including penalties, until it is paid in full. The failure-to-pay penalty generally continues as well, but for an individual who filed the return on time, it is reduced from 0.5% to 0.25% per month while an approved payment plan is in effect. The penalty cannot exceed 25% of the unpaid tax.
Paying as much as possible before the agreement starts, and choosing direct debit, reduces both the total interest and the setup fee.
Collection While a Request Is Pending
With certain exceptions, the IRS will generally not take enforced collection action, such as a levy, while an installment agreement request is being considered, while an agreement is in effect, for 30 days after a request is rejected or an agreement is terminated, and while a timely appeal of a rejection or termination is pending. The time the IRS has to collect is suspended during some of those periods.
According to the Form 9465 instructions, a Notice of Federal Tax Lien generally is not filed for a guaranteed or streamlined installment agreement, but one may be filed in other cases to protect the government’s interest.
Staying in Good Standing
The agreement requires timely monthly payments, timely filing of future returns, and full payment of future taxes when due, which often means adjusting withholding or estimated tax payments. Federal refunds are applied to the balance. If a payment is missed or a new balance goes unpaid, the IRS may terminate the agreement and resume collection, although the taxpayer may be able to appeal through the Collection Appeals Program before termination.
Filing the Form
Form 9465 can be attached to the front of a return or filed separately with the IRS service center listed in the instructions. The taxpayer proposes a monthly payment amount and a payment date between the 1st and the 28th of the month. If no payment amount is proposed, the IRS determines one by dividing the balance due by 72 months. The IRS generally responds within 30 days, although requests for tax due on returns filed after March 31 may take longer.
California Installment Agreements
California tax debts are handled separately by the Franchise Tax Board. According to the FTB, an individual may be eligible for an installment agreement if the amount due does not exceed $25,000, it can be paid within 60 months, and all income tax returns for the past five years have been filed. The setup fee is $34, which is added to the balance, and a financial statement or a tax lien may be required as a condition of the agreement.
The Bottom Line
An installment agreement generally stops levies and reduces the failure-to-pay penalty, but interest continues until the balance is paid. Paying as much as possible up front, using direct debit, and staying current on future taxes keep the cost down and the agreement in good standing.
Owe more than you can pay?
Tax attorney Cassra Minai, Esq. can review your situation in a confidential consultation.