IRS Finalizes New User Fees for Installment Agreements
A new IRS schedule of user fees is now in effect and applies to taxpayers who have entered into installment agreements.
An installment agreement is an option for taxpayers who cannot pay their entire tax bills by the due date.
The IRS proposed changes to the installment agreement user fees last August.
Some of the revised fees, which took effect on Jan. 1, have jumped from a maximum of $120 to $225, but the agency continues to offer reduced or free services to low-income taxpayers. Eligible taxpayers can request reduced fees by applying for an online payment agreement. However, that application is unavailable until about 7 a.m. ET Jan. 9 because of scheduled maintenance.
The IRS has retained the $43 fee applicable for low-income taxpayers. The lower fee is based on family size.
A new lower fee of $31 is available to any taxpayer – regardless of income – if the installment agreement is requested online and paid through direct debit from a bank account. Otherwise, the online payment agreement will cost $149.
Likewise, taxpayers who face the new regular installment agreement fee of $225 (up from $120) – by applying in person, over the phone, by mail, or by filing Form 9465, Installment Agreement Request – can cut their fee to $107 by making monthly payments via direct debit.
The IRS and other federal agencies must by law charge user fees to recover service costs that provide a benefit to recipients. Installment agreements are an example of that benefit. Agencies must review the fees every two years.
The IRS said it often charged less than full cost for services so that they were available to more taxpayers. But the agency’s well-publicized budget cutbacks have forced it to charge more.
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Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.