Have you already requested a payment plan? If you owed money and requested an installment agreement
when you filed your taxes, you should receive something in the mail
from the IRS soon letting you know whether your request was accepted or
not. The IRS usually takes about 30 days to let you know, but if you
filed after March they may take a little longer to let you know.
Here are eight things you should know about installment agreements:
- If your request is approved, you will receive a notice detailing the
terms of your agreement and a request of $120 ($52 if you make payment
by direct debit) to set up the installment agreement.
- IRS approval allows you to pay the tax over 72 months and by filling out the request you agree to pay on time.
- Your future tax obligations have to be paid in full and all of your required tax returns have to be filed.
- If you have a refund coming in the future it will be applied to the
amount you owe, but you still are required to make your monthly
installment agreement.
- You are still charged interest and may be charged a late payment
penalty on tax not paid in full by the due date even if your request is
granted.
- You can make your installment payments by check, money order, credit card, direct debit, or payroll deduction.
- If you make a payment late or don’t pay a balance due on a tax
return you file later, you will be in default of your agreement and the
IRS may take enforcement actions that’s why it’s best to make payments
automatically via direct debit or payroll deduction so you don’t forget.
- You may be able to restructure your payment plan if you forget to
pay, but you will incur another set-up fee and you will have to wait to
see if the IRS agrees to another plan.