IRS Installment Agreement

IRS Installment Agreement

An IRS installment agreement allows the taxpayer to pay his full federal income tax debt in smaller, more manageable amounts. Installment agreements generally require equal monthly payments. The amount and number of your installment payments is based on the amount of unpaid federal income tax debts. The IRS also considers your ability to pay. However, that an installment agreement is more costly than immediately paying all your unpaid federal income tax debts. The IRS charges interest and penalties on the unpaid portion of the federal income tax debt.

In addition, the IRS charges a setup fee for installment agreements. If you owe the IRS more than $25,000, the IRS may also ask for financial information to determine your ability to pay. Even if you set up an installment agreement, the IRS may still file a Notice of Federal Tax Lien to secure the government’s interest until you make your final payment. However, the IRS can’t take any collection actions affecting your property while the IRS considers a taxpayer’s request for an installment agreement, while the installment agreement is in effect, for 30 days after the IRS rejects your request for an installment agreement, or for any period while the taxpayer appeals the rejection.

IRS Installment Agreements Fees

The IRS is raising its fees for installment agreements and offers in compromise. Effective January 1, 2014, the Internal Revenue Service will increase the processing fees for standard installment agreements from $105 to $120 and doubt as to collectability offers in compromise from $150 to $186.  The fees for a direct debit installment agreement remains unchanged at $52.

If you have unpaid federal income tax debts and unpaid IRS tax debts, contact Chicago CPA and attorney Brian J. Thompson for an IRS installment agreement.