You can negotiate a payment plan with the IRS by filing your tax return by the deadline

You can negotiate a payment plan with the IRS by filing your tax return by the deadline, paying as much of your tax as you can, and requesting a payment agreement. Payment plans or agreements are also called payment options or installment agreements.

After you apply for a payment plan, you will receive written notification from the IRS as to whether your installment terms have been accepted or whether the terms need to be modified. You should negotiate a monthly payment based on your ability to pay without defaulting.

If you owe less than $25,000 in combined taxes, interest, and penalties, you can file an Online Payment Agreement (OPA) Application. If you qualify, you can arrange either a short-term payment extension or a monthly payment plan.

You can also apply to set up a payment plan by filing Form 9465 (PDF), the Installment Agreement Request, with either your electronically filed return or your paper return. Alternatively, you can send Form 9465 to the address on the bill or notice you receive from the IRS.

If you owe more than $25,000 in combined taxes, interest, and penalties, you may still qualify for a payment plan. However you may need to complete a Collection Information Statement, Form 433-F (PDF), as well as Form 9465.

If you are unable to satisfy your IRS debt through a payment plan, you may qualify for an Offer in Compromise (OIC), an agreement with the IRS that settles your debt for less than the full amount. The IRS is unlikely to accept your OIC unless the amount is equal to or greater than the reasonable collection potential (RCP). The RCP includes your assets and potential future earnings.

You can find more information about negotiating a payment plan from the relevant IRS Web page.