A short-term payment plan is an option that the IRS may use to give you a small amount of additional time to pay off your tax liabilities.
If you owe an outstanding balance, the first step is often for the IRS to ask you to pay it in full immediately. There are various options you can use to do this, such as using IRS Direct Pay. You may have the money on hand to pay the outstanding balance, which can resolve the issue relatively quickly.
However, if you cannot pay in full right away, then the IRS may authorize a short-term payment plan that runs for up to 180 days. This is done with no additional fee.
Both businesses and individuals are able to set up these short-term payment plans, though businesses need to do so by phone and individuals can sometimes use the Online Payment Agreement application. Either way, although potential penalties and interest may apply, this is a way to pay your tax balance over the next few months without significant issues.
What if 180 days is not enough?
If 180 days will not be enough time to pay off the balance, there are also long-term payment plans. You may need to submit specific paperwork, such as Form 9465. There is often a user fee for a long-term plan, but it depends on the individual. Some low-income taxpayers are eligible to have this fee waived.
Exploring your options
This helps demonstrate various ways to pay off your tax balance with the IRS. It is important to know exactly what you are eligible for and what legal options you have.