Delay Your IRS Tax Collection With A Payment Plan

Delay Your IRS Tax Collection With A Payment Plan

Many Americans are experiencing extremely difficult and trying economic times and they may find that one of their creditors is the Internal Revenue Service. The IRS is charged with the collection of federal taxes owed.

Most people who file income tax returns according to the IRS statistics do get a refund however there is that portion who once they file their return find out that they have a balance due.

Sometimes the amount that is owed is a modest sum and paying it does not present a problem. The flip side is that for others the amount due is a major problem and they simply do not have the resources to make payment when they file their tax return.

There are processes which may delay your IRS tax collection issue with a payment plan that the IRS makes available and that may save you some money.

If you know that you will owe money and will be able to make payment within 6 months of the due date, or basically by October 15th, then you should file form 1127 which is a Request for an Extension of Time for Payment of Tax. It must be filed by the original due date of the return and the proof of financial hardship must be made. The benefit to this short term agreement is that the late payment penalty is waived and only interest is charged.

If you owe less than $25,000 and know that you cannot make payment within six months then you may delay your IRS tax collection with another payment plan. The IRS may allow you to participate in an Installment Agreement. The usual payment period is 60 months and during the time that you are enrolled in the plan the late payment penalty is reduced by 50%.

There is an enrollment fee of $105 which is reduced to $52 if you authorize automatic electronic deductions of the monthly payments from a bank account. In addition you are required to make certain that all future returns for the life of the agreement do not include any balance due.

It should always be remembered that the IRS wants to work with you.