Question

I set up an IRS installment plan to pay off taxes. Is there a penalty if I don’t adhere to my payment plan and pay off debt early?

Answer

There’s no penalty for paying off your IRS payment plan early. In fact, if you pay tax debt quickly, it’s likely the installment plan fee will be waived.

You can avoid the fee by paying the full amount within 120 days. Apply online to specify this option to pay taxes. If you owe more than $50,000, call the IRS at 800-829-1040 to discuss your tax debt options.

If you can’t pay taxes in full amount within 120 days, you’ll have to pay one of these fees for setting up the agreement:

  • $52 for a direct debit agreement
  • $120 for a standard agreement or payroll deduction agreement
  • $43 if your income is below a certain level

Fill out Form 13844 to apply for the reduced user fee.

Related Topics

Related Resources

What To Do With A Tax Refund

Wondering how to use your tax refund? You can save your tax refund or pay down debt to improve your financial situation. Learn more at H&R Block.

IRS Letter 3289 – Notice of Determination Concerning Request for Innocent Spouse Relief

Did you receive IRS Letter 3289? Learn more about letter 3289 and how to handle it with help from the tax experts at H&R Block.

The IRS, Bitcoin, and Other Virtual Currencies | H&R Block

Have you found yourself wondering how the IRS classifies Bitcoin? Our tax pros discuss relevant IRS Bitcoin law and notices. Learn more with H&R Block.

How Form 1098-C Applies to Your Vehicle Donation Deduction

Donating a qualified vehicle to a charity? Learn how Form 1098-C is used to report the details of your donation and how it affects your deduction.