If you owe the IRS and can’t pay in full, it’s scary. You might be thinking, “Will they even let me do a monthly payment plan? What do they look at? What if I get denied?”
Let’s walk through this together, step by step, like friends.
In most cases, if you file all required tax returns, owe under certain limits, and agree to a reasonable monthly payment that fits IRS rules, your payment plan (called an “installment agreement”) is usually approved automatically—often without a human even reviewing it.
In this article, we’ll go over what the IRS looks at when you apply, the kinds of payment plans they have, common reasons plans are denied, how long approval takes, and what you can do if you’re worried about getting approved.
How IRS Monthly Payment Plans Work in General
The IRS refers to monthly payment plans as “installment agreements.” They let you pay your balance over time instead of all at once.
There are two big groups:
- Simple/online payment plans (for lower balances)
- More detailed plans (for higher balances or complex cases)
For most people with a normal tax bill, the process is actually pretty straightforward.
What the IRS Checks Before Approving Your Plan
1. Are you up to date on your tax returns?
The IRS usually won’t approve a payment plan if you haven’t filed the required tax returns.
Info: Before applying, ensure all past-due returns have been filed. If the IRS doesn’t have a clear picture of what you owe, they can’t approve a plan.
They don’t require every little thing from your life story. They just need to see that you’re caught up on filing.
2. How Much You Owe (Key Limits)
The amount you owe decides how “strict” the review is.
Here’s a simple view:
| Total IRS balance owed* | Typical type of plan | Review style |
| Up to about $10,000 | Very simple plan | Often auto-approve if rules are met |
| Up to about $25,000–50,000 | Streamlined plan | Limited review, often no documents |
| Above that | Detailed plan | Deeper review of finances |
*This usually includes tax, penalties, and interest.
Fact: The IRS has “streamlined” rules that allow automatic approval if your balance and repayment time fit within their published limits. You can read current details on the IRS “Payment Plans” page at IRS.gov.
3. Your proposed monthly payment
The IRS mainly asks: “Will this pay off the debt in time?”
For streamlined plans, they often want:
- The full balance is paid within a set number of months, and
- A payment that is not obviously too low
If your payment is too small to pay off in time, they may:
- Ask for a higher payment, or
- Ask for financial information to see what you can really afford
Quick Tip: Take the total you owe and divide it by 72 (6 years). If your monthly payment is at least that much and your balance is under IRS limits, approval is more likely for a streamlined deal.
4. Your financial situation (for larger or complex cases)
If you owe a lot or want a very low payment, the IRS may review:
- Your income (paystubs, business income, etc.)
- Your basic living expenses (rent, food, utilities, car)
- Your assets (home equity, savings, investments)
They use published “allowable expenses” to decide what they think is “reasonable.”
If your expenses are significantly higher than the standard amounts, you may need to explain why.
Danger: Don’t guess or make up numbers on financial forms (like Form 433-A or 433-F). If the IRS identifies significant discrepancies, it can slow down the process or negatively impact your chances of a favorable agreement.
Step-by-step: How The IRS Reviews an Installment Agreement
Step 1: You apply
You can apply:
- Online through the IRS’s Online Payment Agreement tool
- By phone
- By mailing in Form 9465, and sometimes a financial form too
The IRS system checks:
- Do you owe under the limit for a streamlined plan?
- Are you current on filings?
- Does your payment fit their rules?
Step 2: Automatic or quick system review
For many people, especially those who:
- Owe under certain limits, and
- Ask for a payment that will pay the balance on time
…the IRS system just approves it automatically.
Suggestion: If you can fit under the “streamlined” limits, do it. It’s usually faster, needs less paperwork, and has a higher chance of approval.
Step 3: Human review (if needed)
If your situation is more complex, a human may look at your file.
They may check:
- Your financial forms and supporting documents
- Whether your expenses are within “allowable” amounts
- If you recently moved assets or money in ways that look suspicious
They may call you or send a letter to request more details. If they think you can pay more, they may counter with a higher monthly payment.
Step 4: Approval, change, or denial
The final outcome is usually one of three:
- Approved as requested – your plan is accepted.
- Approved with changes – the IRS offers a different payment amount or term.
- Denied – often because returns are missing, the payment is too low, or you didn’t send the needed info.
If it’s denied, you often can try again with better numbers or with help from a tax professional.
Warning: Even with a payment plan, penalties and interest typically continue to accumulate until the balance is paid. A plan stops more aggressive collection, but it doesn’t make the debt “cheap.”
Common Reasons IRS Payment Plans Get Denied
A few things trip people up again and again:
- Not filing all required tax returns
- Ignoring IRS letters asking for more information
- Offering an unrealistically low payment
- Leaving out income or assets on financial forms
- Owing so much that the proposed plan doesn’t make sense
If you avoid these mistakes and remain honest and responsive, your chances significantly improve.
What You Can Do To Improve Your Approval Chances
To boost your chances: file all returns first, know roughly how much you owe, pick a payment that can pay off the debt in a reasonable time, and respond quickly to any IRS letters asking for documents.
If you feel overwhelmed, you don’t have to do this alone. A tax resolution firm or enrolled agent can help design a plan that the IRS is more likely to accept and handle calls and letters for you.
Conclusion: What You Should Remember
The way the IRS reviews and approves monthly payment plans is simpler than it looks. They mainly check that you’re filed, honest, within their limits, and offering a payment that makes sense.
If you’re unsure whether your plan will be approved or you’ve already received a rejection letter, it can be a huge relief to have a professional step in. A firm like TLC Action Tax Resolution & Representation can review your situation, talk to the IRS for you, and help you find the best payment plan possible for your budget and your stress level.