There may be times when taxpayers cannot pay what they owe in full, but rememberthe IRS has numerous payment plan options available.
The IRS offers several different payment plan options, but taxpayers may want to firstconsider non-IRS options depending on their financial situation. Regardless of howsomeone pays, they should act quickly because tax bills get larger as long as theyremain unpaid.
Online self-service payment plans
Most taxpayers qualify for an IRS payment plan (or installment agreement) and canuse the
Online Payment Agreement (OPA)
to set it up to pay off an outstandingbalance over time. Once taxpayers complete the online application, they receiveimmediate notification of whether the IRS has approved their payment plan.
The process only takes a few minutes, and there’s no paperwork and no need to call,write or visit the IRS.
Setup fees may apply for some types of plans
. Taxpayers whodon’t qualify for online self-service should contact the IRS for other payment planoptions using the phone number or address on their most recent notice.
Individual taxpayers’
online payment plan options include:
Short-term payment plans – For taxpayers who have a total balanceless than $100,000 in combined tax, penalties and interest. This plangives them an extra 180 days to pay the balance in full.
Long-term payment plan (also called an installment agreement) – Fortaxpayers who have a total balance less than $50,000 in combinedtax, penalties and interest. They can make monthly payments for upto 72 months. Taxpayers are encouraged to set up plan paymentsusing direct debit (automatic bank withdraw), which eliminates theneed to send a payment each month, saves postage costs, andreduces the chance of default. The IRS requires direct debit forbalances between $25,000 and $50,000.
Business taxpayers’
online payment plan options include: Long-term payment plan (also called an installment agreement) – Forbusiness taxpayers who have a total balance less than $25,000 incombined tax, penalties and interest from the current and precedingtax year. They can make monthly payments for up to 24 months.Taxpayers can choose to set up payments using direct debit(automatic bank withdraw) and requires it on balances between$10,000 and $25,000.
Online tools for payment plans
Qualified taxpayers with existing payment plans may be able to use the
OnlinePayment Agreement
to make changes to their plans that include revising paymentdates, payment amounts or bank information for direct debit payments.
Individual taxpayers have the option to sign into or create their own Online Account. This account allows them to:
-Check on any scheduled or pending payments.
-Review payment plan details and payment history.
-View the amount they owe.
Payment options for taxpayers already working with the IRS
Individuals and out-of-business sole proprietors who are already working with theIRS to resolve a tax issue, and who owe $250,000 or less, have the option topropose a monthly payment that will pay the balance over the length of the collectionstatute – usually 10 years. These payment plans don’t require a financial statement,but a determination for the filing of a notice of federal tax lien still applies.
This information has been extracted from the IRS Newswire sent to D&E email and is shared for the purpose of informing our clients. If you want more information, go to the official website of the Internal Revenue Service: https://www.irs.gov – June 9, 2023