If you`re struggling to pay your taxes on time, the IRS offers a solution in the form of a late payment penalty installment agreement. This agreement allows taxpayers to pay their tax bill in smaller, more manageable monthly payments, rather than all at once.
The late payment penalty installment agreement is a straightforward process. You must first file all of your tax returns and be current on any other tax obligations. Once you have done that, you can apply for the installment agreement online or by mailing in Form 9465. You can request to pay over a period of up to 72 months, but you must agree to pay at least the minimum monthly payment amount.
The minimum monthly payment amount is determined by the amount of your tax bill and the length of time you have to pay it off. You can use the IRS`s online payment agreement tool to determine your minimum monthly payment.
It`s important to note that there is a fee for setting up a late payment penalty installment agreement, and interest and penalties will continue to accrue until the balance is paid in full. However, the late payment penalty is reduced from 0.5% to 0.25% per month if you agree to the installment plan.
In addition to the late payment penalty installment agreement, the IRS also offers other types of installment agreements for taxpayers, including streamlined installment agreements and partial payment installment agreements. These agreements have different requirements and payment schedules, so it`s important to research which one is best for your specific situation.
If you`re struggling to pay your taxes on time, don`t ignore the problem. Ignoring your tax bill can result in serious consequences, including wage garnishment and bank levies. Instead, consider setting up a late payment penalty installment agreement or another type of installment agreement. It`s a manageable way to get back on track with your tax obligations and avoid the stress and financial burden of unpaid taxes.