Does IRS charge anything for setting up a payment agreement?
You will pay a one-time “user fee” of $43.00. This amount can be deducted from your first monthly payment.

Do interest and penalties keep running once I start making payments?
Yes. Interest, compounded daily, is charged on any unpaid tax from the due date of the return until the date of payment. The interest rate is the federal short-term rate plus 3 percent. That rate is determined every three months.
A late-payment penalty will also be charged, unless you can show reasonable cause for why your taxes were not paid on time.

How long can I stretch out my payments?
Your payment agreement term depends on your individual financial condition. We will analyze your financial information to determine the longest term allowable.

Can IRS just keep collecting from me forever?
No. Generally, the law gives IRS 10 years from the date a tax is assessed to make full collection. This is called the “Collection Statute.” If there is still a balance at the end of the Collection Statute period, IRS must write it off.

If IRS will eventually write off what I owe them, why not just sit it out for 10 years and let the Collection Statute expire?
IRS will not let the Collection Statute expire without making every effort to collect. Failure to try and resolve your outstanding balances can result in IRS enforced collection activity, such as levies and tax liens.