If you’ve ever had to pay your taxes through an installment plan, you probably know that like most installment situations, there’s an extra fee levied for the privilege of not paying what you owe all at once (not to mention interest). What you may not know is that at the end of 2016, the fees applicable to IRS installment agreements have changed. So what you may have paid (or anticipated paying) before may not apply now. Also, there are actually half a dozen or so different installment situations that may or may not apply to you, depending on your financial situation and how you would pay your installments. Here’s how everything has changed for 2017 and going forward.
First, for a regular installment agreement (payable by coupon book), the fee used to be $120. Now it’s $225. And for a regular agreement set up with direct payments on a debit card, the fee used to be $52, and now it’s $107.
However, if you have a regular agreement but agree to pay online rather than by coupon book, instead of $225 your fee will only be $149. And if you have an online agreement that includes the direct debit card autopayments, your fee actually goes down, from $52 to $31. Clearly the IRS is prioritizing moving installment agreements from paper checks and snail mail to online processing—and really, who can blame them? Also, if you apply and qualify for a low-income installment agreement, your fee doesn’t change at all no matter how you pay—it was $43 before, and it’s still $43 now.
The IRS also changed the fee structure for reinstated or restructured installment agreements ones that come up when an agreement has been in default or needs to be altered somehow. The fee for a reinstated or restructured agreement has risen from $50 to $89, and a fee for low-income reinstated/restructured fees has been added. Fortunately, it’s only $43.
Installment agreements may not be the most pleasant situations to get into—another monthly bill is never fun, and any tax refund you get while still making payments will be applied to the taxes you owe—but as far as tax debt relief is concerned, it’s pretty much the best option out there. And for the most part, these new installment fee changes from the IRS will make it easier to deal with—especially if you’re already set up online.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.