If you owe back taxes to the Internal Revenue Service (IRS), you may be able to set up an installment agreement to pay your debt over time. However, it`s important to be aware of the various fees associated with installment agreements.
First, there is an initial fee to set up the agreement. This fee varies depending on the type of agreement you choose and how you choose to set it up. If you set up the agreement online, you may pay less than if you set it up over the phone or via mail.
Next, there is a fee if you miss a payment or make a late payment. This fee is typically a percentage of the amount you owe and can add up quickly if you consistently miss payments. It`s important to make sure you have enough funds in your account on the due date of your payment or to set up automatic payments to avoid these fees.
There is also a fee if you want to modify your existing installment agreement. For example, if you want to change the amount you are paying each month or the due date of your payment, you may be charged a fee to make the changes.
Finally, there is a fee to reinstate an installment agreement if it`s been terminated due to missed payments. This fee is typically higher than the initial setup fee and can be a setback if you`re already struggling to make payments.
It`s important to note that fees associated with installment agreements can change over time, so it`s important to stay up-to-date on the current fees and regulations. Additionally, if you`re struggling to make payments, there may be other options available to you, such as an offer in compromise or currently not collectible status.
In conclusion, while installment agreements can be a helpful tool for paying back taxes, it`s important to be aware of the fees associated with them. Make sure you have a solid plan in place for making payments and consider seeking professional help if you`re unsure about the best course of action for your specific situation.