A payment plan is an agreement with the IRS to pay the taxes you owe within an extended period of time. You should apply for a payment plan if you think you'll be able to pay your taxes in full within the extended period. If you qualify for a short-term payment plan, you won't have to pay any user fees. One way to pay off tax debt when quick options aren't available is to request an installment plan.
An installment plan is an agreement between the IRS and taxpayers to settle existing tax debts in a more manageable way that doesn't put unnecessary pressure on their finances. Using this option means paying off the tax debt over a longer period of time instead of paying a large sum for a one-time payment. The above article aims to provide generalized financial information designed to educate a wide segment of the public; it does not provide personalized advice on taxes, investments, legal, business or professional. With certain exceptions, the IRS is generally prohibited from collecting taxes and the IRS's deadline for collecting is suspended or extended while the OIC is pending, for 30 days immediately after the rejection of an OIC for the taxpayer to appeal the denial and, if an appeal is requested within 30 days, for the period in which the rejection is considered in appeals.
IRS Direct Pay is a secure service that you can use to pay your 1040 series taxes, estimated taxes, or other associated forms directly from your checking or savings account at no cost to you. You should consider financing the full payment of your tax liability through loans, such as a home equity loan from a financial institution or a credit card. Tax debt is overwhelming for many taxpayers, and not remitting a quick payment to the Internal Revenue Service often results in fines and penalties. Before the IRS considers an OIC, you must have filed all tax returns, received an invoice for at least one tax debt included in the offer, have made all the estimated tax payments required for the current year, and have made all the required federal tax deposits for the current quarter and the previous two quarters if you own a business with employees.
If you can't pay in full, you should pay as much as possible to reduce the interest accrual in your account. However, people sometimes find themselves owing more than they expect or are unable to pay their tax bill. If you can't pay the taxes you owe before the original due date of your return, the balance is subject to interest and a monthly late payment penalty. If you can't pay in full right away, you may be entitled to an additional period (up to 180 days) to pay in full.
Tax debts can be scary, and knowing how to quickly pay off Internal Revenue Service debts is a challenge for many taxpayers. Dealing with the IRS can be stressful, so there are many tax relief companies that can help taxpayers deal with the IRS to set up payment plans and settle their tax debt. IRS installment plans don't affect your credit and the IRS doesn't report them to any of the credit bureaus. These payment plans require the taxpayer to pay opening fees, taxes due, applicable penalties, and interest.
The IRS generally doesn't suspend installment agreements, but you can request an adjustment or termination of the plan if necessary.