Every American earning a taxable income is obliged to pay taxes at the end of each year, and failing to do so can surely land one in murky waters with the IRS. While the IRS is stern about the taxation terms and policies, it is flexible when it comes to understanding the problems faced by taxpayers. It acknowledges the fact that paying the taxes in full, when facing financial turbulence get overwhelming, as a result of which, offers a payment plan known as the IRS installment agreement. When eligible for this provision, taxpayers can repay their tax debt in terms of feasible installments. Read along as we answer three commonly asked questions about the IRS installment agreement.
What is the IRS Installment Agreement and what is the set-up fee involved?
Simply put, the IRS installment agreement is a payment agreement which allows the taxpayers to pay their tax debt in a series of installments spanning across a set time frame. Under the short-term payment plan of an IRS payment agreement, taxpayers are not required to pay the user fee. When applying for a long-term payment plan, on the other hand, there are two options:
Option 1: Monthly payments through Direct Debit
Under this payment option, automatic monthly payments are deducted from the taxpayer’s checking account. The setup fee applies as follows:
- If applied online, the set-up fee would be 31 dollars.
- If applied through mail, phone, or in person, the setup fee would amount to 107 dollars.
- For individuals belonging to the low-income group, the setup fee is waived.
Option 2: Monthly payments via savings account, Electronic Federal Tax Payment System, cheque, debit card, or money order.
Under this payment option, taxpayers can opt for either of the aforementioned methods based on their eligibility criteria; the set-up fee applies as follows:
- If applied online, the set-up fee would be 149 dollars.
- If applied through mail, phone, or in person, the set-up fee would amount to 225 dollars.
- For individuals belonging to the low-income group, the set-up fee is 43 dollars, which may be reimbursed when qualified for certain criteria.
What changes can I make in my payment plan online?
Taxpayers may use the Online Payment Agreement Tool to make these changes:
- Change the monthly payment amount
- Change the monthly payment’s due date
- Reinstate after default
- Converting an existing agreement to a Direct Debit agreement
How can I Revise My Payment Plan Online?
Revising your existing payment plan requires you to login to the Online Payment Agreement Tool. You can make the required changes to your current plan, payment amount and date, on the very first page, itself. Upon making the changes, click submit.
It is to be noted that the notification to revise the payment amount will be sent if the new payment amount does not meet the requirements of the IRS installment agreement. Cases where paying the minimum required amount becomes extremely burdensome, the Form 433-F Collection Information Statement is to be filled and submitted.
The Last Word
Dealing with tax problems by yourself, especially when you have a limited understanding of how the IRS works, may be a risky move. An experienced tax attorney, on the other hand, can help you navigate through all your IRS problems and negotiate a favourable deal for you. If you are looking to apply for an IRS installment agreement, get in touch with an experienced tax attorney in Dallas to fast-track the whole process and resolve your tax problems effectively.
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