IRS Hiking Fees for Installment Agreements

Posted on August 29, 2016

The IRS recently announced that it will increase the user fees it charges for installment agreements.

The IRS also introduced two new types of online installment agreements. The cost of obtaining a regular installment agreement, in which a taxpayer makes manual payments to the IRS on a monthly basis, will go from $120.00 to $225.00. The user fee for a direct debit installment agreement, where the IRS takes payments directly out of your bank account on a monthly basis, will go from $52.00 to $107.00.

The IRS also introduced two new online installment agreements. Under the first new agreement, a taxpayer can set up an installment agreement online and make manual payments to the IRS on a monthly basis, either electronically or by mailing a check. The proposed user fee for this type of installment agreement is $149.00.

The second new type of installment agreement is where the taxpayer sets up an agreement online and agrees to make payments via direct debit on a monthly basis from their bank account. The proposed user fee for this type of installment agreement is only $31.00. The cost for restructuring or reinstating an installment agreement goes from $50.00 to $89.00. The current user fee of $43.00 for low-income taxpayers will remain the same. These proposed changes are scheduled to go into effect on January 1, 2017.

You may ask yourself why the IRS charges a user fee to set up an installment agreement, especially when the installment agreement presumes that the IRS will be paid in full, including penalties and interest. The law requires agencies, including the IRS, that provide special services that confer special benefits on identifiable recipients, such as taxpayers that owe money to the IRS, to establish user fees that recover the full cost of providing those services.

Do you think it is fair for the IRS to charge user fees to a taxpayer that wants to pay their tax liability in full under an installment agreement?

Do you have a tax debt with the IRS that you would like to pay in installments? Don’t represent yourself in the negotiations. Contact Chicago tax lawyer Patrick T. Sheehan and Associates today!