What is the minimum payment the IRS will accept?

An envelope from the Internal Revenue Service (IRS) rarely brings good news, but opening that envelope to find a tax bill that exceeds what you can immediately pay can trigger a unique kind of fear. Still, it's an issue that's becoming increasingly common as more Americans grapple with outstanding tax debt. There were hundreds of billions of dollars worth of unpaid taxes owed across millions of households, according to 2022 IRS data — a figure that continues to climb alongside other forms of household debt.

If you're one of the millions who owe money to the IRS, your immediate instinct might be to ignore it, hoping the problem resolves itself or at least stays dormant. That's exactly the wrong approach, though. The IRS has extensive collection powers, from wage garnishments to bank levies, that can be used to try to recoup what you owe. And, interest compounds daily on these unpaid federal tax balances, so what starts as a manageable debt can quickly snowball into something far more serious.

What most taxpayers don't realize, though, is that in many cases, the IRS would rather work out an arrangement than pursue aggressive collection actions. The agency even has structured payment programs specifically designed for people who can't pay immediately. But what is the minimum amount the IRS will accept each month on your unpaid tax bill?

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What is the minimum payment the IRS will accept?

When it comes to monthly tax debt payments, the IRS doesn't have a single universal minimum payment amount that applies to everyone. Rather, the minimum amount owed depends heavily on a few different factors, including which payment arrangement you qualify for and your specific financial situation.

For short-term payment plans (meaning that you're paying within 180 days), there's technically no minimum payment requirement. You simply need to pay your full balance before the deadline. This option generally works if you owe less than $100,000 in combined tax, penalties and interest, and you can settle your debt quickly.

Long-term installment agreements with the IRS are more structured. If you owe $50,000 or less in combined tax, penalties and interest, you can set up a streamlined installment agreement. The minimum monthly payment is calculated by dividing your total balance by 72 months, essentially spreading your debt over six years. For example, if you owe $15,000, your minimum monthly payment would be approximately $208.

If your IRS debt exceeds $50,000, you'll need to complete more detailed financial disclosure forms as part of the process. The IRS will then analyze your income, expenses and assets to determine what you can reasonably afford to pay each month. This calculation aims to ensure you can cover necessary living expenses while still making progress on your tax debt.

Learn more about the tax relief options available to you here.

What to do if you can't afford the minimum payments to the IRS

If you do the math and determine that even the minimum payment would create genuine financial hardship, the IRS offers several alternatives. These options are reserved for taxpayers in difficult circumstances, though, and you'll need to qualify for and be approved to take advantage of them.

One option is an Offer in Compromise, which lets you settle your tax debt for less than the full amount owed if paying in full would cause economic hardship. The IRS has approved thousands of these settlement offers in recent years, though acceptance rates can vary based on a range of factors. To qualify, you need to demonstrate that you can't realistically pay your full tax debt based on your assets and future income potential.

Currently Not Collectible status is another option. If your monthly expenses exceed your income, the IRS may temporarily halt collection efforts. Your debt doesn't disappear, though, and interest and penalties continue accruing. The IRS also periodically reviews these cases to see if your financial situation has improved. However, you won't face liens or levies during this period. 

Partial payment installment agreements, which allow you to make monthly payments that won't fully satisfy your debt before the collection statute expires (typically 10 years from assessment), could be yet another option you have. With this route, you essentially pay what you can afford each month, and any remaining balance may eventually expire uncollected.

These options can be tricky to narrow down and qualify for, so if you want to take advantage of them, working with a tax professional may be your best bet. There are tax relief companies that specialize in negotiating with the IRS, preparing required documentation and identifying the best resolution strategy for your situation. While you can handle IRS negotiations yourself, this type of professional representation often proves valuable for complex cases or when you're unfamiliar with tax resolution processes.

The bottom line

The minimum payment the IRS will accept depends on factors like your total debt, how quickly you can pay and your financial capacity. If you want to ensure that you have the most options when dealing with tax debt, try to take action before the IRS initiates collection efforts. The longer you wait, the more penalties and interest accumulate, and the fewer options may be available. Addressing your tax debt proactively, though, gives you the best chance of finding an affordable resolution that protects your financial future.