How Much Does An IRS Installment Agreement Cost?
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Choosing a tax relief option can be nerve-wracking. Ideally, you want the best outcome for the lowest cost. More specifically, most people want an option that will get rid of the tax debt quickly while at the same time being feasible. For many taxpayers, an installment plan is an extremely feasible tax relief option. This is because installment plans can vary depending on your tax debt and financial situation. If you want to learn more about IRS installment agreements, don’t hesitate to call a tax lawyer to learn more about your options. In the meantime, here is everything you need to know about the fees for an installment plan.
Tax Attorney Fees
You don’t need to hire a tax attorney to apply for an IRS installment agreement, especially since the IRS has made it easier to apply for installment agreements online. On the other hand, experienced tax attorneys understand the IRS’s criteria for short and long-term installment agreements. Moreover, tax attorneys know how to secure practical installment agreements with the IRS in conjunction with other tax resolution options. Accordingly, some individuals choose to hire a tax attorney to secure an installment agreement with the IRS. Attorney fees will vary from case to case, but many attorneys charge roughly $3,500 for the typical installment agreement; and yes, tax attorneys often charge flat fees for this type of service.
Yes, the IRS charges a fee for applying for an installment plan. The fee will depend on the kind of plan you choose, as well as your own personal circumstances. For a short-term payment plan which is payable in one hundred eighty (180) days or less, there are no fees if you apply online or through the phone. However, you will have to pay assessed penalties and interests.
For a long-term payment plan, which is a plan payable for more than one hundred eighty (180) days, the fees may vary. If you pay through direct debit, and you apply online, there will be a $31 setup fee. If you pay through direct debit and pay either by phone, mail, or in-person, then the fee is $107. These will be waived however if you qualify for a low-income exemption.
If your long-term payment plan is paid through another method other than direct debit, the fees will also vary. For online applications, the fee will be $149. Applications made through phone, mail, or in-person will be assessed a fee of $225. Lastly, for low-income earners, there is a $43 fee that might be reimbursed under certain conditions.
Form 9465 Installment Agreement Request
If you owe $50,000 or less, you may be able to apply online with the IRS for an installment agreement. However, if you owe more than $50,000 you may be required to file Form 9465 to request an installment agreement. Instructions for Form 9465 can be found here.
Installment Agreements Are Cheaper Than Offers in Compromise
As can be seen above, installment agreements are generally cheaper than offers in compromise. Tax attorneys generally charge more for offers in compromise and the IRS requires an initial payment when applying for an OIC. However, installment agreements alone don’t necessarily reduce the taxpayer’s overall tax liability, so while OIC’s are more expensive they also have the potential of reducing the taxpayer’s tax liability. To find out whether an installment agreement with the IRS or an offer in compromise are viable tax resolution strategies, consult with an experienced tax attorney.