State and Federal Payment Relief Options

Explore different options to set up a payment plan or potentially reduce your tax debt with Internal Revenue Service (IRS) or Franchise Tax Board (FTB).
Updated 09/12/2023
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When it comes to facing tax penalties and payment challenges, it is important to communicate with the IRS or California Franchise Tax Board (FTB) immediately if the amount owed is a hardship, and explore different options to set up a payment plan or potentially reduce your tax debt. There are a variety of options, not all listed here, but that can be found on the IRS and FTB websites linked at the end of this article. Below are some frequently asked questions with important information you should know.

Please note that setting up a payment plan is a separate process and assistance is not provided through MyFreeTaxes.org; this includes our in-person and virtual Volunteer Income Tax Assistance (VITA) free tax preparation services.

The IRS and FTB both charge a penalty for not filing by the tax deadline if you owe taxes. They also begin to charge interest on any unpaid taxes starting the day after the filing deadline. By filing an extension, you will avoid a penalty for not filing on time, but please note that interest will still accumulate for any unpaid taxes owed. To keep interest fees down on unpaid taxes, try to pay as much of the amount due as possible before the tax deadline. 

If you expect a refund, there is no penalty for filing late and an extension is not required. However, we still recommend filing as soon as possible as there is a statute of limitations of how long you can wait to claim a refund. The filing deadline for individuals who are owed a refund have three years after the filing deadline of the specific tax year to claim their refund. This means, the filing deadline for tax year 2022 will be April 18, 2025. This also means that if you did not file your 2019 tax return, you had until July 15, 2023 to claim your refund. 

The filing deadline, usually around April 15, is the deadline to file taxes and pay if you owe the IRS or FTB. For Californians that owe taxes for tax year 2022 the deadline was April 18, 2023, unless you reside in one of the many counties throughout the state declared as disaster areas and granted a tax extension until October 16, 2023. Not sure if this extension applies to you? Read more here.

There are several factors that affect whether you owe taxes or not including:

  • Incorrect withholding amounts:
    If you underpaid taxes on the income you made, this means you will owe a higher amount of taxes at the end of the year. If you overpaid taxes on the income you made by withholding a higher amount from your income, then you will receive a refund.
  • Eligibility for tax credits and deductions
    If you are eligible for tax deductions or nonrefundable tax credits, these will lower your tax bill up to $0. If you are eligible for refundable tax credits, these are tax credits that can be cashed out if they surpass the amount of taxes owed, then you would receive a refund.

To estimate if you will owe taxes or will receive a refund, use the Withholding Calculator from the IRS here. 

For individuals who are unable to pay their tax liability in full, the IRS offers a short-term (180 days or less) and long-term (monthly installments) payment plans; the FTB offers a monthly installment agreement (up to three to five years maximum).

TypePayment Plan OptionsEligibilityHow to Apply
IRS Short-term Payment Plan
  • Amount owed to be paid in 180 days or less
  • $0 set up fee
  • Plus accrued penalties and interest until the balance is paid in full
  • Fees apply when paying by card

 

  • To be eligible, your combined tax, penalties, and interest must be less than $100,000.

 

 

 

 

 

IRS Long-term Payment Plan
  • Amount owed to be pain in more than 180 days (monthly payments)
  • Setup fees vary
  • Fees apply when paying by card.

 

 

 

 

 

 

 

 

 

 

 

 

  • To be eligible, your combined tax, penalties, and interest must be less than $50,000.

 

 

 

 

 

 

 

 

 

 

 

 

Can apply online, by phone, mail or in person.

  • Option 1: Pay through Direct Debit
    • Apply online: $31 setup fee
    • Apply by phone, mail, or in-person:$107 setup fee
    • Set up fee can be waived if you meet certain income requirements
  • Option 2: Monthly payments through Direct Pay, using the Electronic Federal Tax Payment System (EFTPS) (enrollment required), or payment by check, money order or debit/credit card
    • Apply online: $130 setup fee
    • Apply by phone, mail, or in-person: $225 setup fee
    • $43 set up fee for tax filers who meet certain income requirements (this set up fee can also be reimbursed if certain conditions are met)

Phone: 800-829-1040
Mail: Form and instructions are here.

 

FTB Installment Agreement
  • Up to 3–5 years maximum
  • Up to 90 days to process the request (while waiting for approval, the FTB recommends continuing payments. Penalties and interest accrue until the balance is paid in full).
  • $34 setup fee (if approved)

 

 

 

 

  • If the amount owed is less than $25,000 and can be paid in 60 months or less
  • If you have filed income tax returns the last 5 years

 

 

 

 

 

 

Can apply online, by phone, mail or in person.

  • You cannot apply online if you have a:
    • Current installment agreement with the FTB
    • Wage garnishment (earnings withholding order)
    • Bank levy (order to withhold)
    • Other collection orders (warrant, continuous order to withhold)

Phone: 800-689-4776
Mail: Form and instructions are here.

 


To apply for a payment plan with the IRS (federal taxes) click here. To apply for a payment with the Franchise Tax Board (California) click here.

Need support?

If your tax debt is more than what you can handle, the IRS and FTB offer additional relief options. To read more about options offered through the IRS, click here. To read more about options offered through the FTB, click here.

If you need additional support with navigating your federal tax debt relief options, you can also contact the Taxpayer Advocate Service (TAS), an independent organization from the IRS, that provides additional support to taxpayers. For more information about the Taxpayer Advocate, click here.