IRS Payment Plans: Different Federal Tax Repayment Plans

The Federal Government offers several different IRS payment plans or options for people with tax liabilities. You can also use these options if you have completed your tax return but can’t afford to pay the tax owed.

IRS Payment Plans

IRS Installment Agreements

An installment agreement is when you make regular payments on your tax owed to the IRS. If you can't afford to pay your taxes, you should apply for this option. There are a few different installment plans. Normally, you can only get one payment plan at a time, but in some cases, the IRS will allow you to add new tax debt to an existing payment plan. 

With most agreements, you make payments on the whole balance. However, there are also partial payment installments where you make payments on a partial balance.

You must apply for installment plans, and there are different paperwork requirements for each plan. When you are on an installment plan, penalties and interest continue to accrue on the account, but the failure to pay penalty is generally cut in half (compared to not being on an installment plan). If you can get a bank loan with a lower interest rate, you may want to use that instead.

Payment Options In Full

Paying your taxes in full is the best way to avoid interest, penalties, wage garnishments, and levies. If you have the money, you should always pay your taxes.

Some taxpayers take out loans, refinance their homes, use credit cards, or borrow from friends and family so they can pay in full. If you decide to use a loan or credit card, always compare those interest rates to the interest rates the IRS would charge you on an installment plan. The IRS rates change quarterly.

Short-Term IRS Payment Extension Options

There are also a few short-term payment extension options. As long as you file on time, you can pay your taxes about 55 days late, without risking your assets. That is not an official plan, but if you just need some extra time, it can work.

Officially, the IRS offers a 180-day extension with no setup fee. You have to apply online, but most people are accepted. In hardship cases, the IRS may grant six-month extensions. To apply for a payment extension due to financial hardship, you can use IRS form 1127

Help With IRS Payment Plans or Extensions

Our network of tax professionals that include tax attorneys, CPAs, and enrolled agents can guide you through the process and help you obtain a reasonable payment plan that fits with your budget. That can include payment plans on the full balance, Partial Payment Installment Agreements (PPIA), Offers in Compromise (OIC), extension requests, or even establishing uncollectible status. Use the search below to start your search to find the best professional to help with your tax issues. Be sure to select all agencies involved, problems, and you can select the solution you seek as well to find the highest-rated professionals that meet your needs. If you are looking for a payment plan with the IRS, be sure to filter by IRS and payment plan as a solution.


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