Owing the Internal Revenue Service (IRS) money is not an occurrence that is all that rare. However, it is also not something that you want languishing for months and years, on end. Indeed, the longer that it is not addressed, the more money you will owe in penalties, interest and fees. As time goes on, too, the IRS will take more aggressive measures to collect the money that is owed to them.
Today, though, there are more options for you to chose from when it comes to paying your back taxes, interest and penalties. Just prior to the 2007 tax season, on October 16, 2006, the IRS announced a new, taxpayer-friendly option for those people who owe prior year taxes. Designed for people who owe too much to make it comfortable to pay off in one lump sum but not an unreasonable monthly amount, the IRS Online Payment Agreement Program gives taxpayers an option to voluntarily pay off their delinquent taxes.
This application, available on the agency’s website at irs.gov, gives taxpayers another way to work out payment agreements without having to speak directly with an IRS agent over the telephone. By using this option, you can set up an agreement, any time of the day or night, that suits your needs. There is no need to wait in a lengthy queue to speak to someone on the phone.
There are several other advantages to using this online application:
eligible taxpayers, or those representatives that they authorize, can use it
qualify right online
apply online anytime
receive approval immediately
Qualifying for this type of agreement depends on a couple of factors. This program is open only to those taxpayers who owe the IRS less than $50,000. If you owe more, you will have to go the traditional route to work out repayment options. In addition, before applying, you need to file all required tax returns.
Once you have determined your eligibility, gather your paperwork to fill out the application. You need your:
Individual Tax Identification Number or Social Security Number
IRS issued balance due statement
Personal identification number
If you do not already have a personal identification number, you can use the caller identification number to establish one online. The caller identification number can be found on the balance due notification that the IRS sent you.
In order to accommodate most circumstances, the IRS offers three options for making payments.
Payment in full: If you pay off your balance due within ten days, you can save both penalties and interest.
Short term extension: This option allows you to have up to 120 days to pay off your balance. There is no fee for this choice but fees and penalties will continue to accrue.
Monthly payment plan: With this option, you will be assessed a $43 fee. In addition, penalties and fees will accrue.
Using the IRS Online Payment Agreement Program puts you, the taxpayer, at the helm of your prior year taxes by giving you the tools you need to pay down your penalties and fees.