IRS Payments
You can set up IRS payments if you find you owe a tax bill that you can’t pay all at once. It costs you more money, because you’ll pay penalties and interest on your taxes, but a payment agreement can be another option if you owe a lot of tax. The IRS will usually work with you to reach a payment amount that you can manage more effectively.
How to Set up IRS Payments
If you owe less than $25,000 in taxes, interest, and penalties, and you want to set up a payment agreement, you can go online to the Online Payment Agreement (OPA) and set up an agreement. Or, you can call the phone number on your tax notice or bill, and talk to a representative. You can also fill out a PDF form online and mail it to the address on your bill. Even if you haven’t gotten a bill yet, you can still use the OPA to create IRS payments on the current year returns.
Even if you owe more than $25,000 in taxes, penalties, and interest, you may still qualify for IRS payments. You’ll have to complete a Collection Information Statement, Form 433F (PDF). You can call the phone number on your tax bill, and order a copy if you can’t print it out online. Then, you’ll receive a written notification from the IRS if your terms are agreeable, or they’ll have to be modified.
IRS Payments Fees
The IRS has implemented user fees when you set up your installment agreement. If you set up an agreement the charge is $105, but it drops to $52 if you allow the IRS to directly deduct payments from your bank account. If you are below the government’s poverty guidelines, a reduced fee of $43 applies to you. Regardless of income levels, there is a $45 fee if you default on or restructure an existing agreement. If your financial situation changes, you should contact the IRS payments office to see if you can restructure your agreement, or include additional amounts into one agreement.
Missed IRS Payments
You have to make your payments on time each period. If you can’t make a payment, you need to contact the IRS immediately. If you miss payments, you’ll default on your agreement, the IRS can file a Notice of Federal Tax Lien, and they can take an IRS levy on your bank account. Make IRS payments regularly to avoid this action.