The Internal Revenue Service (IRS) on Monday announced the first increases in user fees for installment agreements. The increased fees will also apply to installment agreements made using the Online Payment Agreement application on the IRS web site.
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Effective January 1, 2007, the following fees will increase:
- The fee for new direct debit installment agreements, where payments are deducted directly from a taxpayer’s bank account, will increase $9 to $52 from $43.
- The fee for other new installment agreements will more than double, rising from $43 to $105.
- The fee to restructure an existing or reinstate a defaulted installment agreement will almost double, rising to $45 from $24.
The Office of Management and Budget (OMB) has directed federal agencies to charge user fees which reflect the full cost of goods or services conveying special benefits beyond those accrued by the public in general. Increases in the costs of labor and other processing costs since 1995, when the fees were implemented for installment agreements, have resulted in significant increases.
During fiscal year 2006, almost 2.8 million taxpayers established installment agreements to pay their tax bills. In order to be eligible for an installment agreement, a taxpayer must file all tax returns that are required to be filed and be current with estimated tax payments if applicable.