Can't Pay Your Taxes? How IRS and New York State Payment Plans Work in 2026
A tax bill you cannot pay in full is stressful, but it is one of the most fixable problems in the tax system. Both the IRS and New York State will let most people pay over time. The catch is the order you do things in, and the costs that keep running while you pay.
The short answer: Yes. The IRS lets most people pay over time if they owe $50,000 or less and have filed every required return. New York State has its own plan, available online for balances of $20,000 or less paid in 36 or fewer monthly payments. File first, then apply. Interest keeps running until the balance is paid, so a plan costs more than paying now.
Step one: file every missing return
Neither agency will set up a normal plan while returns are missing. To apply online for a long-term IRS plan, you must have filed all required returns. New York State needs a bill before you can request a plan, and the bill only comes once your return is processed.
If you are behind on more than one year, start there. Filing also stops the biggest penalty from growing: the failure-to-file penalty is 5% of the unpaid tax per month, up to 25%, ten times the monthly failure-to-pay rate. Our guide to missing the October 15 deadline covers late returns, and if your records are a mess, catch-up bookkeeping rebuilds them from your bank statements.
IRS payment plans at a glance
These are the fees on irs.gov as of October 2026. The IRS changes them from time to time, so check the live table before you apply.
| Plan | Who qualifies | Setup fee |
|---|---|---|
| Short-term (pay within 180 days) | Owe less than $100,000 in tax, penalties and interest | $0 |
| Long-term, automatic bank debit, applied online | Owe $50,000 or less, all returns filed | $29 |
| Long-term, other payment method, applied online | Same | $69 |
| Long-term, by phone, mail or in person | Same | $107 (bank debit) or $178 (other) |
| Low-income applicants | Income at or below 250% of the federal poverty guidelines | Waived with bank debit; $43 otherwise, may be reimbursed |
Owe more than $50,000? A plan is still possible, but the IRS will usually ask for a financial statement (Form 433-F or 433-A) showing your income, expenses and assets, and the process takes longer. This is where professional help earns its fee.
New York State payment plans
New York calls its plan an Installment Payment Agreement (IPA).
- Online: request it through your NYS Online Services account if you owe $20,000 or less and can pay in 36 or fewer monthly payments.
- You need a bill first. The Tax Department will not set up a plan without one.
- Payments come straight from your bank account, on the 5th or the 15th of the month.
- Owe more, or need longer? You have to contact the Tax Department and provide financial details.
- Miss payments and the plan can end. New York can then move to collection, including bank levies, wage garnishment and a tax warrant.
If you owe both the IRS and New York, set up both plans. Paying one agency and ignoring the other is a common mistake that ends in collection letters.
What a payment plan does not do
- It does not stop interest. Interest runs on the unpaid balance with both the IRS and New York until it is paid off.
- It slows one penalty, it does not stop it. If you filed on time, the IRS failure-to-pay penalty drops from 0.5% to 0.25% a month while an approved plan is in place.
- It does not erase penalties already charged. Ask for that separately. First-time penalty abatement can remove failure-to-file and failure-to-pay penalties for one year if your previous three years were clean.
- It does not fix a wrong bill. If the IRS filed a return for you (a substitute for return), it gave you no deductions. File your real return first. The real number is usually much lower.
Payment plan or something else?
| Your situation | Usually the best fit |
|---|---|
| You can pay it all within six months | Free short-term plan |
| You can pay it off over a few years | Long-term plan with automatic bank debit (cheapest setup, hardest to miss a payment) |
| You cannot cover basic living costs | Ask about "currently not collectible" status. Collection pauses, interest keeps growing |
| You will never be able to pay the full amount | An offer in compromise may settle for less. Most people do not qualify, so be wary of anyone who promises one |
How we help
London's Tax Services handles back taxes and payment plans from our office at 75 South Broadway, 4th Floor, in White Plains, for clients across Westchester County, the Bronx and New York City. We pull your IRS and New York transcripts, file any missing years, check that the bill is right, request penalty relief where it fits, and set up plans with a monthly payment you can actually keep. Book a free 15-minute call or call (646) 917-7714.
Self-employed and owing again every April? BIB Pro keeps a running number for what to set aside for taxes each month, so next year does not start with a bill.
Frequently asked questions
Can I get an IRS payment plan if I have not filed all my returns?
Not the standard online plan. The IRS requires all required returns to be filed before it approves a long-term payment plan. File the missing years first, then apply.
How much does an IRS payment plan cost?
A short-term plan (paid within 180 days) has no setup fee. As of October 2026, a long-term plan costs $29 to set up online with automatic bank debit and $69 online with other payment methods, more by phone or mail. Interest and penalties are extra.
Does New York State offer tax payment plans?
Yes. If you owe $20,000 or less, you can request an Installment Payment Agreement online through your NYS Online Services account and pay in 36 or fewer monthly payments. You need a bill first. Larger balances require contacting the Tax Department with financial details.
Will a payment plan stop IRS penalties and interest?
No. Interest keeps running until the balance is paid. If you filed on time, the failure-to-pay penalty drops from 0.5% to 0.25% a month while an approved plan is in place, but it does not stop.
Can the IRS take my house if I owe back taxes?
It is possible but rare. The IRS usually uses liens, bank levies and wage garnishment first, and it generally does not levy while a payment plan request is pending or the plan is in good standing.