The IRS Increases Taxpayer Entrance Fees for Installment Agreements While Adding Reduced Online Option

By J. Daniel Boysen on January 5, 2017

 

On December 2, 2016, the IRS issued final regulations outlining increased installment agreement entrance fees while adding a reduced fee for online payment agreements (click here to view the Federal Register which includes a complete copy of the final regulations). The change in installment agreement entrance fees will apply to installment agreements entered into on or after January 1, 2017.

Taxpayers are often placed in the unfortunate predicament of owing an amount to the IRS they cannot fully pay all at once. As relief, the IRS offers taxpayers the ability to voluntary enter into an agreement to pay the amount owed in installments to the extent the IRS determines that entering into the installment agreement will facilitate the full or partial collection of the amount owed.

For installment agreements entered into prior to January 1, 2017, the fee to enter into the agreement was $120 while the fee was $52 when the taxpayer opted to pay by way of a direct debt from the taxpayer’s bank account. Unfortunately for taxpayers, the IRS has decided to increase those fees. For installment agreements entered into on or after January 1, 2017, taxpayers will have to pay $225 (vs. $120) for a regular installment agreement. For the direct debit option, taxpayers will have to pay $107 (vs. $52).

On a more positive note, the IRS has introduced a new online payment option for installment agreements that includes a reduced fee. To cut down on the processing time and its own administrative costs, the IRS is offering an online option where taxpayers will be charged a reduced fee of $149 (vs. the new $225 fee) for regular installment agreements or $31 (vs. the new $107 fee) for the direct debit option. As a result of the increased fees, taxpayers may want to consider the online option. If you have questions regarding IRS installment agreements in general, please contact Daniel Boysen at (214) 749-2413 or dboysen@meadowscollier.com

     





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