Many people who are not able to pay their tax payments immediately ask the question “Can I make payments to the IRS?” The answer is yes; however, paying your full tax debt will save you the set up fees and reduce or eliminate penalty costs. If you have another source, such as a credit card or loan, you could save money by paying your entire tax bill. If you have no other options, IRS installment agreements are a great way to help you avoid default.
Prior to applying for installment agreement, you must file all of the required tax returns. Determine the amount you are able to pay each month. There is a minimum monthly installment requirement of $25. If you are wondering “Can I make payments to the IRS?”, you are probably wondering how much it will cost you. If you set up a direct debit agreement, there is a $52 fee. The IRS will debit your bank account each month for the agreed upon amount. You can also set up a payroll deduction or a standard agreement but the fee will be $105. For people whose income falls below a certain amount, the IRS offers a reduced fee of $43.
Now that your question “Can I make payments to the IRS?” is answered, you probably want to know if it is a complicated process. Applying for an IRS installment agreement is easy. There are three different options to choose from based on whatever is easiest for you. People who owe $50,000 or less combined income tax, interest and penalties, apply online at https://www.irs.gov/Individuals/Online-Payment-Agreement-Application. You may also set up your installment agreement over the phone by calling the phone number located on your IRS notice or bill. Additionally, you can apply by mail using Form 9465, Installment Agreement Request. If you owe in excess of $50,000, a second form second form must also be completed, Form 433-F, Collection Information Statement.
You also want to know “Can I make payments to the IRS to avoid default with the IRS?” If you understand your IRS installment agreement, you will be able to avoid default. You must keep your IRS account in current and in good standing by paying the minimum payment on time. All of your subsequent tax returns must be filed on time. Even when any refunds are applied to your account balance, you need to continue making all of your scheduled payments. If you let your account go in default, you may have to pay an additional reinstatement fee. Until you pay your IRS account balance in full, interest and penalties will continue accruing. Immediately contact the IRS if you feel you might be in danger of defaulting on your installment agreement. In general, the IRS will not enforce collection actions while an installment is in effect, while your application is being considered, during an appeal or for 30 days after an installment agreement application is rejected.
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Last updated: March 25, 2023
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