If you owe money to the I.R.S, one option to resolve it is to enter into a payment plan or as the I.R.S. calls it, an Installment Agreement. Believe it or not, the I.R.S. charges a fee to enter into a payment plan with them.
And as of January 1, 2017, the I.R.S. has increased its filing fee or "user fee" for establishing an Installment Agreement, from $120 to $225. They have also updated their Form 433-D to a January 2017 version, to reflect the higher fees.
Not only is the regular Installment Agreement fee higher now, but if you are establishing a Direct Debit Installment agreement (where they take the money directly out of your bank account), the fee has increased from $52 to $107. If you default on an I.R.S. Installment Agreement but are able to reinstate it, the Reinstatement Fee is now $89, an increase from $50.
If you have income below 250% of the Department of Health and Human Services poverty guidelines, you may apply for a reduced user fee of $43. This amount was not increased.
The I.R.S. often thinks much more highly of your ability to pay than you do! That is why if you owe them a lot of money, it's a good idea to hire a professional to help you work out an Installment Agreement with them. Only accountants, attorneys, and "enrolled agents" are authorized to represent taxpayers in front of the I.R.S.
If you owe the I.R.S. over $10,000 and you need help to resolve your taxes, contact our office. We help clients resolve their tax collection issues with their I.R.S.
What do you think about the I.R.S. raising these fees? Is it good or bad? Shouldn't they be keeping the user fees low to encourage payment plans? Or should people pay to help offset the costs that the government has? Please leave your comments or questions below.