How to Go About Applying For IRS Payment Plans by JaneHayden


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									                      How to Go About Applying For IRS Payment Plans

When you owe tax to the IRS (Internal Revenue Service), it can be both worrying and costly.
Everyone knows it's better to pay the full balance outstanding as soon as the bill comes due, but
this isn't always possible. What you do need to do is pay as little in the way of interest and
penalties however, so there's no point ignoring it. This is when IRS payment plans often turn
out to be to your advantage.

Setting up monthly installment to the IRS isn't child's play, but it isn't hard either. This step-by-
step guide shows you how to go through the process as easily and quickly as possible. You can
do it yourself or your tax adviser can act on your behalf. You can also set up the plan over the
internet or by mail, completing and returning the application forms.

To get started, make sure you know just how much you owe. This includes your original tax debt
AND late penalties and interest. The easiest ways to find out it is to ring the IRS. You'll have the
choice of various installment options: through payroll deductions, credit card, by direct debit,
money order or check once a month or by EFTPS. Perhaps the easiest way is with an Online
Payment Agreement.

If you know you'll be able to pay the tax bill within the next couple of months, the IRS will give
you 120 days to pay the amount off completely. Though you'll still pay interest, there's no charge
for this agreement. If you need to pay in installments within your budget however, the payment
plan is the best option.

Once decided on this course of action, be aware there are fees. An installment plan costs up to
$105 to set up. You will be eligible for a significant discount however if you're a lower income
earner or set up a direct debit. As long as you don't miss any payments, this is a fee you'll only
need to pay once.

Next, calculate exactly how much you can realistically pay back every month, without fail.
Select a date that remains unchanged throughout the repayment plan. Make it a date when you'll
definitely have the funds; immediately after your pay day is ideal. Remember that this is a long-
term commitment that must be adhered to each month. If you've chosen to pay by check, allow
7-10 days to make sure it arrives and has cleared before the selected date every time.

To qualify for a payment plan automatically, there are certain criteria. Your total tax debt must
be under $10,000 and the monthly payment you set needs to repay the amount in full within three
years, though some sources say this could be extended to ten years. Your tax returns must also be
up to date, with no filings missed for at least five years.

You may want to get a qualified tax agent to assist you with your IRS payment plans, especially
if you need to negotiate a smaller payment than the IRS suggest. You do need a tax professional
if your tax liability is over $10,000, or you should you be unable to meet the criteria that lead to
automatic acceptance by the IRS. In a simple case however you can resolve the debt yourself
using this simple guide.

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