How to Lower Your IRS Payment Plan Payment

Yes. The IRS lets individuals change the monthly payment amount and due date of an existing plan through the online payment agreement tool in their IRS Online Account. Revising online costs $6, which may be reimbursed for low-income taxpayers. Revising by phone, mail, or in person costs $89 ($43 for low-income taxpayers, which may be reimbursed), and changes to an existing direct debit agreement have no fee. A lower payment means the balance takes longer to pay off, so more interest and penalties build up.

Sign in to the online payment agreement tool with the Apply/Revise option. On the payment options page, change the plan type, payment date, or amount, then submit. If the new amount does not meet the IRS's requirements, the tool prompts you to raise it. If you cannot make the minimum it requires, it gives you directions for filing Form 9465 with Form 433-F, or the consolidated Form 433-H. For a refresher on the original setup, see how to set up an IRS payment plan.

When the payment you can afford is below what the IRS accepts automatically, it reviews your finances. Individuals generally use Form 433-F or Form 433-H, and businesses use Form 433-B. The IRS compares your income with allowable living expenses under its Collection Financial Standards, so gather pay stubs, bank statements, and bills for rent or mortgage, utilities, insurance, vehicle costs, and medical expenses before you apply.

If your budget cannot cover a payment that pays the debt in full before the collection statute expires, ask about a Installment Agreement" class="text-primary underline underline-offset-2 hover:text-primary/80">partial payment installment agreement. If you cannot pay anything without being unable to cover basic living expenses, the IRS may place the account in currently not collectible status. If the total you could ever pay is less than the balance, an offer in compromise may be worth evaluating.

Interest is charged at the federal short-term rate plus 3 percentage points, compounded daily, and the failure-to-pay penalty generally continues at 0.25% per month during an approved plan if your return was filed on time. Stretching the payment lowers the monthly amount but raises the total you pay. If your income recovers, you can revise the plan again or pay extra whenever possible.

Keep making your current payment until the revised plan is approved. Stay current on new returns and new taxes, because a new balance can default the plan. Future refunds are applied to the debt, and you still owe each scheduled payment. The IRS generally will not take enforced collection action while a plan is in effect, for 30 days after a plan is rejected or terminated, or while an appeal of that decision is pending. If you already missed payments, read payment plan default and reinstatement.

Business accounts cannot apply for or revise a payment plan online. Call the number on your notice or 800-829-4933, Monday to Friday, 7 a.m. to 7 p.m. local time. Expect to provide Form 433-B if the payment you propose is lower than the IRS will accept without a financial review. Sole proprietors and independent contractors apply as individuals. See payment plans for businesses and the self-employed.

Calculus Tax reviews your IRS account transcripts with Brevitax, IRS resolution software, and our in-house Settlement Officer reviews the results to see whether a lower payment, a partial payment plan, or hardship status fits your budget. We work from our Burbank office and remotely nationwide. Contact us for a free case review.