Posted on March 28, 2011 by colonialtax
Because your balance is subject to interest and a monthly late payment penalty, it is in your best interest to:
Pay in full as soon as you can to minimize the additional charges. Penalties are also assessed for failure to file a tax return so you should file immediately even if you cannot pay your balance in full.
There are many ways to pay an outstanding federal income tax liability. You may pay by check or money order, made out to “United States Treasury.” You may pay by transferring money electronically from your bank account. The Electronic Payment Options page on the IRS.gov website explains how to make an electronic payment. You may also pay by credit or debit card by calling Official Payments Corporation at 888-872-9829, Link2Gov Corporation at 888-729-1040, or RBS WorldPay, Inc. at 888-972-9829. A service provider, not the IRS, may charge a convenience fee for electronic payments from your bank account or for payments by credit or debit card. If you cannot pay in full, you should pay as much as possible to reduce the accrual of interest on your account. Please refer to Topic 158 for information needed to ensure that your payment is credited properly.
You should consider financing the full payment of your tax liability through loans, such as a home equity loan from a financial institution or a credit card cash advance. The interest rate and any applicable fees charged by a bank or credit card company are usually lower than the combination of interest and penalties imposed by the Internal Revenue Code. If you cannot pay in full immediately, the IRS offers a short amount of additional time, up to 120 days, to pay in full. No fee will be charged for entering this type of payment arrangement, however, interest will continue to accrue until the liability is paid in full.
Installment Agreements
An installment agreement allows you to make a series of monthly payments over time. The IRS offers various options for making monthly payments, such as:
• Direct Debit from your bank account
• Payroll Deduction from your employer
• Payment via check or money order
• Payment by Electronic Federal Tax Payment System (EFTPS)
• Payment by credit card via phone or Internet, or
• Payment by Online Payment Agreement (OPA)
A one-time installment agreement fee of $105.00 will be charged when you enter into an installment agreement unless you choose to pay through a Direct Debit from your bank account, in which case the fee is $52.00. Taxpayers with income at or below 250% of the Department of Health and Human Services poverty guidelines may apply for a reduced user fee of $43.00. You can request the reduced fee using Form 13844, Application For Reduced User Fee For Installment Agreements.
Please note: The user fee for restructuring or reinstating an established installment agreement is $45.00 regardless of income levels or method of payment.
You also may request a short amount of additional time, up to 120 days, to pay in full. This payment arrangement does not carry a fee, however, interest will continue to accrue until the liability is paid in full.
If you enter into an installment agreement, your monthly payment should be based on your ability to pay and should be an amount that you can pay each month to avoid defaulting.
•. Colonial Income Tax can help you with a full range of tax services. Our staff members include Certified Public Accountants (CPA) and IRS Certified tax professionals with many years of experience. Our services include income tax preparation for your federal and state income tax returns, small business tax returns, partnerships, LLC’S and trusts.
The initial meeting for new clients is free. Our fees will vary on the complexity of your tax situation. In payment we accept cash, checks, debit card, VISA, MasterCard and money orders. Please call us at, 302-322-1135 to arrange a meeting with one of our tax professionals or e-mail JCW@ColonialIncomeTax.com for more information
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