Can’t Pay Your Taxes? Set Up an Online Payment Plan.

Share on Facebook0Share on LinkedIn0Pin on Pinterest0Tweet about this on TwitterShare on Google+0

The Internal Revenue Service has several new features added to the interactive Online Payment Agreement application found on the IRS website. These features are designed to make it easier for taxpayers to make changes to existing installment agreements and apply for a new one. The system now permits individuals to revise their payment due dates and/or amounts on existing agreements, to revise existing extensions to regular installment agreements, and to revise existing regular installment agreements to a payroll deduction installment agreement or a direct debit installment agreement.

Click here to read or watch more IRS Problem resources.

More than 75 percent of those eligible for an installment agreement can establish one using the online application, according to the IRS. Since launching in October 2006, more than 30,000 taxpayers have successfully used it to set up a payment agreement. Eligible taxpayers who owe $25,000 or less in combined tax, penalties and interest can self-qualify, apply and receive immediate notification of approval for installment agreements – including pre-assessed agreements on current tax years’ liabilities. Paying taxes on time and in full avoids unnecessary penalties and interest. However, taxpayers who cannot pay in full may request a payment agreement. To be eligible, a taxpayer must first file all required tax returns and be current with estimated tax payments, if applicable.

A short-term extension can give a taxpayer up to 120 days to pay. No fee is charged, but the late-payment penalty plus interest, will apply. A monthly payment plan or installment agreement gives a taxpayer more time to pay. Though interest still applies, the late-payment penalty is cut in half for any month an installment agreement is in effect. This reduced rate of 0.25 percent (1/4 of 1 percent) per month is only available if the tax return was filed on time. Alternatively, taxpayers can apply for a payment agreement by filling out Form 9465, Installment Agreement Request. This form can be filed along with either an electronically-filed return or a paper return. If filing on paper, be sure to attach it to the front of the return.

Share on Facebook0Share on LinkedIn0Pin on Pinterest0Tweet about this on TwitterShare on Google+0