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If your tax burden is less than $50,000, you can divide it into manageable payments. All while using a payment plan or installment agreement. You and the IRS will decide on a manageable monthly payment and a timetable for paying off the debt as part of the application process. Debts that can be repaid in 180 days or less can be put on short-term payment plans. The key advantage of a short-term payment plan is that there is no setup fee from the IRS. The 0.5% failure to pay penalty, which accrues, is the only additional expense under this plan. Installment agreements are long-term payment plans that run longer than 180 days. Depending on how you apply and intend to pay, the setup charge might range from $31 to $225. The cost may be waived or decreased for low-income people. With a payment plan, the IRS’s time to collect is suspended and you won’t be liable to tax levies, but penalties and interest continue to accrue as you reduce the sum.