Top
Small business and startups advice

Tax Tips for Individuals

2018
Jan-08-2018Tax Cuts and Jobs Act -- Individual Provisions
2017
Jan-14-20172017 Income Tax Updates
2016
Aug-19-2016Installment Agreement FeesMar-29-2016Where Is My Refund?Feb-10-2016How To Make Your Children "Pay Off" at Tax TimeFeb-05-2016IRS Payment OptionsFeb-01-2016Choosing the Right Filing StatusJan-22-2016Choosing the Right Tax Forms and Who Should File
2015
Sep-09-2015IRS Payments Made Easier (but not painless)Sep-09-2015IRS Reminder--Report Name ChangesSep-04-2015Affordable Care Act EstimatorsSep-04-2015College Tuition Tax CreditsSep-04-2015Tax Tips --DivorceJan-23-2015IRS Payment Plans / Fresh Start Program
2014
Dec-31-2014Affordable Care Act Tax provisions for 2014
Current
Oct-02-20135 Tips for Early PreparationOct-02-2013Amended ReturnsOct-02-2013Ayuda en EspanolOct-02-2013Car DonationsOct-02-2013Charitable ContributionsOct-02-2013Check Withholding to Avoid a Tax SurpriseOct-02-2013Credit for the Elderly or DisabledOct-02-2013Deductible TaxesOct-02-2013Deduction of State and Local TaxesOct-02-2013Earned Income Tax Credit for Certain WorkersOct-02-2013Filing an ExtensionOct-02-2013Filing Deadline and Payment OptionsOct-02-2013Foreign IncomeOct-02-2013Gift GivingOct-02-2013Marriage or Divorce…Oct-02-2013Refinancing your HomeOct-02-2013Refund, Where's My Refund?Oct-02-2013Selling your HomeOct-02-2013Tax Credit For Plug-in Electric VehiclesOct-02-2013Tax Incentives for Higher EducationOct-02-2013Ten Ways to Avoid Problems at Tax TimeOct-02-2013The Tax Advocate Service, provided by the IRSOct-02-2013Tips and Taxes

Installment Agreement Fees

Date: 8/19/2016

 Installment Agreement Fees

 

The Internal Revenue Service is proposing a revised schedule of user fees that would take effect on Jan. 1, 2017, and apply to any taxpayer who enters into an installment agreement.

The proposal, one of several user fee changes made this year, reflects the law that federal agencies are required to charge a user fee to recover the cost of providing certain services to the public that confer a special benefit to the recipient. Although some installment agreement fees are increasing, the IRS will continue providing reduced-fee or no-cost services to low-income taxpayers.

Installment Agreement Fees
The revised installment agreement fees of up to $225 would be higher for some taxpayers than those currently in effect, which can be up to $120. However, under the revised schedule any affected taxpayer could qualify for a reduced fee by making their request online using the Online Payment Agreement  application on IRS.gov. Moreover, there would be no change to the current $43 rate that applies to the approximately one in three taxpayer requests that qualify under low-income guidelines. These guidelines, which change with family size, would enable a family of four with total income of around $60,000 or less to qualify for the lower fee.  Also, for the first time, any taxpayer regardless of income would qualify for a new low $31 rate by requesting an installment agreement online and choosing to pay what they owe through direct debit.

The top rate of $225 applies to taxpayers who enter into an installment agreement in person, over the phone, by mail or by filing Form 9465 with the IRS. But a taxpayer who establishes an agreement in this manner can substantially cut the fee to just $107 by choosing to make their monthly payments by direct debit from their bank account.

Alternatively, a taxpayer who chooses to set up an installment agreement using the agency’s Online Payment Agreement application will pay a fee of $149. Similarly, they can cut this amount to just $31 by also choosing direct debit.

Proposed Fees
Here is the proposed schedule of user fees:

Regular installment agreement:    $225

Regular direct debit installment agreement:  $107

Online payment agreement:    $149

Direct debit online payment agreement:   $31

Restructured or reinstated installment agreement: $89

Low-income rate:      $43

Further details on these proposed changes can be found in proposed regulations (REG-108792-16), now available in the Federal Register. The IRS welcomes comment on these changes, and a public hearing on the regulations will take place in Washington, D.C. See the proposed regulations for details on submitting comments.

By law, federal agencies are required to charge a user fee to recover the cost of providing certain services to the public that confer a special benefit to the recipient. Installment agreements are an example of a service that confers a special benefit to eligible taxpayers. Agencies must review these fees every two years to determine whether they are recovering the costs of providing these services.

In the past, the IRS often charged less than the full cost for many services in an effort to make them accessible to a broader range of taxpayers. But given current constraints on agency resources, the IRS can no longer continue this practice in most cases.

Nevertheless, the IRS intends to continue providing reduced-fee or no-cost services to low-income taxpayers. For that reason, the IRS will continue subsidizing part of the cost of providing installment agreements to low-income taxpayers.

More information about the IRS User Fee Program is available on IRS.gov