IRS Online Payment Agreement Fees: What You Need to Know

If you owe taxes to the IRS and can`t pay in full, you may be eligible for an online payment agreement. This will allow you to pay your debt in installments over time. However, there are certain fees associated with this service that you should be aware of.

Here`s what you need to know about IRS online payment agreement fees:

1. Setup fee: When you apply for an online payment agreement, you will be required to pay a setup fee. The fee varies depending on the type of agreement you choose. For example, if you file Form 9465 to request an installment agreement, the fee can range from $31 to $225. If you apply online using the IRS website, the fee can be as low as $0 and as high as $149, depending on your income level.

2. User fee: In addition to the setup fee, you will also be required to pay a user fee. This fee is based on the type of agreement you select as well as the payment method you use. For example, if you choose a direct debit installment agreement, the user fee can range from $31 to $107. If you opt for a standard installment agreement, the fee can be as high as $225.

3. Late payment fee: If you miss a payment or pay less than the agreed amount, you may be subject to a late payment fee. This fee is generally 0.5% of the unpaid tax amount per month, up to a maximum of 25%.

4. Interest charges: Finally, it`s important to remember that interest will accrue on your unpaid balance until it is paid in full. The interest rate is determined by the IRS and is generally the federal short-term interest rate plus 3%.

In summary, if you are considering an online payment agreement with the IRS, be sure to factor in the fees associated with the service. These include a setup fee, user fee, late payment fee, and interest charges. To avoid any additional fees, be sure to make your payments on time and in the full amount agreed upon.