The Internal Revenue Service has automated user fee calculations for taxpayers who enter into installment agreements to make it easier to determine their eligibility for fee reductions for low-income taxpayers.
Taxpayers were previously required to submit a paper Form 13844 to request a reduced user fee. Now the IRS automatically determines a taxpayer's eligibility for the reduced fees.
An installment agreement allows taxpayers to pay the IRS their full tax debt in smaller, more manageable amounts, although the penalties and interest still continue to accrue on the unpaid portion of the debt.
To set up an installment agreement with the IRS, taxpayers have to pay a one-time fee. The fees are generally $105 for non-direct debit agreements, $52 for direct debit agreements and $45 for reinstatements. A reduced fee of $43 is available for low-income taxpayers.
All taxpayers who enter into an installment agreement will now be automatically considered for the reduced fee based on their reported income under the new process. Those who qualify will be charged the reduced fee, whether they fill out the payment agreement application on the IRS Web site, by telephone, face-to-face or by mail.
"This new process will improve service for and reduce the paperwork burden on taxpayers applying for an installment agreement," said IRS Acting Commissioner Linda E. Stiff (pictured) in a statement. "Now, taxpayers who are eligible for the reduced fee will automatically receive it without extra work on their part."
In some instances, taxpayers may receive an installment agreement acceptance notice from the IRS, but not a reduced user fee, even though they believe they should still qualify for one. In that case, taxpayers can request a reduced fee by completing Form 13844, Application for Reduced User Fee for Installment Agreements, and submit it to the IRS within 30 days of receipt of the installment agreement acceptance notice.