Is the IRS payment plan worth it? Keep reading for the pros and cons. Then, you should call the IRS to discuss your payment plan. See how much your charitable donations are worth. Start.
Read on to learn about the pros and cons of paying the IRS with your credit card, as well as how to pay the IRS while minimizing credit card charges. The second is the recurring payment option, which requires you to make the first payment with the amount of the offer and make monthly payments in accordance with the proposed terms of the offer. The disadvantages of the IRS payment plan and the installment agreement are usually the penalties and interest added to the debt. Credit card payments can be quite expensive because processors charge a minimum fee of 1.87% to 1.99% of the payment to process the transaction.
Taxpayers can also request a short-term extended payment plan of up to 180 days by contacting the IRS by phone or mail. If you have a plan where payments automatically leave your bank account, you should contact the IRS directly. An IRS payment plan is an agreement you make directly with the agency to pay your federal tax bill for a specified period of time. However, if you have a long-term repayment plan, you should choose a payment amount that pays off your debt within 72 months.
Agreements may include payment plans, extensions of payment, or agreements due to financial difficulties, such as deferment of payment (called “currently uncollectible status”) or a committed offer. The time it takes to get an agreement with the IRS depends on your situation, the type of agreement, and how you interact with the IRS. However, signing up for an IRS payment plan doesn't exempt you from interest and penalties for late payments; these accrue until your balance is zero. You should never pay the IRS with a check or directly from your bank account (see the IRS direct payment option).
Unless the IRS rules consider you to be a low-income taxpayer, most payment agreements require an initial fee with the IRS. The IRS has incentives to establish payment plans online through its application for an online payment agreement and for direct debit payments. The cost of an IRS payment plan depends on the plan you choose, how you apply for it, and whether you qualify for a rate reduction. The non-collectible (CNC) status currently means that you won't have to make payments to the IRS until your financial situation improves.