For taxpayers with income at or below certain levels, the Internal Revenue Service announced that user fees for payment-installment agreements will hold steady in 2007.

The agency announced changes to some user fees in November -- the first increases since the fees were implemented in 1995 -- saying that the Office of Management and Budget has directed federal agencies to charge fees reflecting the full cost of goods or services that convey special benefits to recipients beyond the general public.

Information about requesting the reduced user fee will be included in installment agreement acceptance letter sent to individuals.

The new fees will kick in on Jan. 1, and include:

  • The fee for new direct debit installment agreements, where payments are deducted directly from a taxpayer’s bank account, will increase from $43 to $52;
  • The fee for other new installment agreements will increase from $43 to $105; and,
  • The fee to restructure an existing or reinstate a defaulted installment agreement will increase from $24 to $45.

To be eligible for an installment agreement, a taxpayer must first file all tax returns that are required to be filed and be current with estimated tax payments, if applicable. In the 2006 fiscal year, almost 2.8 million taxpayers established installment agreements to pay their tax bills.

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