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What to know about IRS installment plans

| Apr 23, 2020 | IRS |

Individuals in Georgia who can’t afford to pay an income tax bill on time are often eligible for an installment plan. Taxpayers may be able to choose how much they want to pay each month or allow the IRS to determine their minimum monthly payment. In most cases, an individual will have 72 months to pay what they owe. It is important to note that interest will continue to accrue until the balance is paid in full.

Therefore, it is generally a good idea for an individual to pay as much as possible each month. The IRS also encourages taxpayers to make additional payments whenever they can afford to do so. Those who owe less than $10,000 may not need to make minimum monthly payments as long as they pledge to pay their entire past-due tax bill within three years.

Furthermore, those who owe less than $10,000 will automatically be approved for an installment plan without having to provide additional information. The IRS charges a fee of $52 to create a direct debit installment plan and $105 for a standard payment plan or to deduct payments from a person’s paycheck. There is no fee for those who agree to pay what they owe within 120 days of entering into an installment agreement.

Taxpayers who owe money to the IRS have many options to pay their past-due balances. An attorney could help a client learn more about installment plans and the benefits of applying for one. In some cases, making regular payments may reduce the chances that the government puts liens on personal or business property. Furthermore, the IRS might waive or reduce penalties or interest that have been added to the original balance owed.

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