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Installment Agreements Increase in 2007

Sometimes regardless of how well we attempt to plan, we end up owing the federal government additional taxes. If things are really not going well, the amount we owe is more than what we have available. Thus we look for ways to "finance" those tax payments. While there are almost always better alternatives, we can finance our payments with the government directly.

The IRS charges a user fee for processing requests for installment agreements. For many years that fee (which is in addition to any taxes, interest, or penalties owed) has been $43.

Beginning on January 1, 2007, the user fee charged by the IRS is increasing to $105. (It looks like they are catching up for many years of not tracking inflation.)

For those people already involved in an installment agreement, but needing to make adjustments in the terms of the agreement due to changes in their financial situation, the adjustment fee is increasing from $24 to $45.

The fee for those who use direct debit when entering into a new installment will be $52.

"Tax software is no substitute for tax knowledge."

Any views expressed herein are based on our best information. The content of this web site was written as general information without specific individual information and thus may not apply in all situations. This material was not written, and cannot be used by the taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer.

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Janelle Ogg, EA
Richard Ogg, EA