The IRS has proposed higher user fees for taxpayers who enter into installment agreements.
The proposal, which would take effect on January 1, is one of several user fee changes made this year, is in line with a law that requires federal agencies to charge a user fee to recover the cost of providing certain services to the public that confer a special benefit to the recipient.
Although some installment agreement fees are increasing, the IRS will continue providing reduced-fee or no-cost services to low-income taxpayers.
The revised fees of up to $225 would be higher for some taxpayers than those currently in effect, which can be up to $120. Under the revised schedule, any affected taxpayer could qualify for a reduced fee by making their request online using the Online Payment Agreement application on IRS.gov.
The proposed schedule of fees:
- Regular installment agreement: $225
- Regular direct debit installment agreement: $107
- Online payment agreement: $149
- Direct debit online payment agreement: $31
- Restructured or reinstated installment agreement:†$89
- Low-income rate: $43
There would be no change to the current $43 rate for taxpayer requests that qualify under low-income guidelines, which applies to roughly one in three. These guidelines, which change with family size, would enable a family of four with total income of around $60,000 or less to qualify for the lower fee.
For the first time, any taxpayer regardless of income would qualify for a new low $31 rate by requesting an installment agreement online and choosing to pay what they owe through direct debit.
The top rate of $225 applies to taxpayers who enter into an installment agreement in person, over the phone, by mail or by filing Form 9465 with the IRS. A taxpayer who establishes their agreement in this manner can cut the fee to just $107 by making their monthly payments by direct debit from their bank account.
A taxpayer who sets up an installment agreement using the agencyís Online Payment Agreement application will pay a fee of $149; direct debit will cut this to $31.
The IRS welcomes comment on the changes, and a public hearing on them will take place in Washington, D.C.
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