Each year, many Americans come to the unpleasant realization that they owe the IRS money. The tab ranges from a few hundred to many tens of thousands, depending on what that person earns and the assets controlled. What many people don’t realize is that the IRS will take less than a single lump sum payment.
IRS Payment Plans
IRS payment plans are an option for those that owe money to the IRS. There are penalties, such as interest, that the person incurs from failure to pay the entirety of the sum at once, but for citizens who cannot meet that obligation in a single stroke, this option exists. Citizens with less than $25,000 in combined tax are typically eligible to set up installment plans online, or through use of Form 9465. Citizens who owe more than $25,000 may still qualify to set up payment options, but additional information may be needed to demonstrate a need.
There are nominal administration fees also associated with setting up payment options. These will differ depending on how the payments are set up, and where that citizen is on the income scale. Payments may be set up to be deducted directly from a bank account. The fee associated with direct deduction are small so it’s worth the effort to ensure that the debt gets paid on time and in a consistent manner. Any person interested in setting up a tax payment plan should speak to the IRS or a CPA.
For those that cannot afford to repay their full tax debt, the IRS offers a debt negotiation options. An Offer In Compromise (OIC) is a IRS debt settlement option that may allow the taxpayer to repay their debts for less than is actually owed. The IRS maintains all the power in accepting an OIC and taxpayers should be wary of an company that offers to settle a tax debt without written approval from the IRS.