An installment agreement allows you to make a series of monthly payments for your liability over time. It is important to note that there are fees and that interest and penalties may accrue in some cases until the liability is paid in full. This option must be carefully weighed against the alternatives and you should seek advice from a tax professional to learn what the extra amount due may be.
If you enter into an installment agreement, your monthly payment is be based on your ability to pay and should be an amount that you can pay each month to avoid defaulting.
There are a number of ways to make the monthly payments to the IRS:
- Direct debit from your bank account;
- Payroll deduction from your employer;
- Payment via check or money order;
- Payment by Electronic Federal Tax Payment System (EFTPS);
- Payment by credit card via phone or Internet; or
- Payment by Online Payment Agreement (OPA).
A one-time installment agreement user fee of $120.00 will be charged when you enter into a standard installment agreement or a payroll deduction installment agreement. If you choose to pay through a direct debit from your bank account, the user fee is $52.00. Taxpayers with income at or below 250% of the Department of Health and Human Services poverty guidelines may apply for a reduced user fee of $43.00
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