If a taxpayer does not have enough money to pay their tax bill in full when they submit their return, they may be allowed to make installment payments instead. If a taxpayer cannot pay their federal tax bill in full, they may be able to set up a payment plan, also known as an installment agreement. There are costs involved with this solution, but they can be reduced if the taxpayer has a low enough income and pays their taxes in a certain way. When a taxpayer enters into an agreement, they will be charged a one-time fee of $105, unless they want to pay via direct debit, in which case the amount will be lowered to $52. If a taxpayer’s income is at or below 250% of the federal poverty threshold established by the Department of Health and Human Services, then they are eligible to apply for the $43 reduced charge. Form 13844, Application for Reduced User Price for Installment Agreements, is used by taxpayers to apply for this price reduction. Even if this request is approved, interest and penalties will continue to accrue on unpaid taxes until those taxes are paid in full.
Another option is to extend the payment deadline by up to 120 days, giving the taxpayer a bit more time to settle up. There are no out-of-pocket costs associated with this selection, but interest will accrue until the tax is paid in full. At the time of tax filing, the taxpayer may ask for a payment plan. They can do this by filling out the Online Payment Agreement (OPA) form on the IRS website to request a pre-assessment installment agreement on existing tax liabilities. Alternatively, they can seek a payment plan in writing and include it with their tax return by attaching form 9465, Installment Agreement seeks. The Online Payment Agreement (OPA) application on the IRS website allows taxpayers who did not seek an installment agreement when they filed their return to apply for one after receiving a bill. Form 9465, Installment Agreement Request, or a handwritten request for a payment plan attached to the front of the bill can be submitted to the IRS to initiate one.
Calling the toll-free number shown on the statement is another option for making a payment arrangement. In most cases, you should expect to hear back from the IRS regarding the status of your request within 30 days. The taxpayer is responsible for indicating their monthly payment amount and preferred payment date. Taxpayers should provide sufficient time for shipping so that payments can be received by the IRS by the due date. The taxpayer should pick a reasonable amount that won’t force them to miss or be late on payments. You can choose from a variety of payment methods, such as:
Bank account deduction by direct debit
Money orders and checks are accepted.
Credit card transactions over the phone or online.
Taxes can be paid through the EFTPS (Electronic Federal Tax Payment System).
Money transfers with an OPA (Online Payment Agreement)
Employer-issued deductions from pay
Any tax refunds that are owed to the taxpayer in subsequent tax returns will be allocated to the tax balance payable as per the terms of the installment agreement. After an agreement has been reached, the taxpayer must continue to file taxes and make payments in accordance with the terms of the agreement. If the taxpayer is in default of the agreement due to missing payments, making late payments, or failing to comply with future returns, the IRS may file a Notice of Federal Tax Lien or take other collection action. It is also vital to adhere to the conditions of an installment agreement because fees may be incurred if the arrangement is changed, restarted, or restructured. If a taxpayer wants to make sure that an IRS Installment Agreement is an option and that the terms of the agreement are fair, it may be in their best interest to hire an attorney.
Action Tax Relief [http://actiontaxrelief.com/] is led by CPA and Executive Vice President Trace George. based out of Abilene, Texas. If you have serious tax issues with the IRS, you can get help from Action Tax Relief. We work with consultants and certified public accountants to help taxpayers resolve their tax problems, such as IRS levies and liens.
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