Tips on Paying IRS Back Taxes

Last updated on May 9, 2022

Taxpayers under a tax debt payment plan or those who want to pay their tax debt in full with a single payment, have various options to pay. Currently, the IRS back allows payments to be made through electronic funds transfer, a check, a money order, cash or a cashier’s check.

Many taxpayers pay their tax debt under an Installment Agreement, which is an IRS debt payment plan where taxpayers pay their tax debt in fixed monthly payments. As most taxpayers do not have the financial capability to fulfil their tax debt with one payment, they usually choose to pay in installments.

Online Payment of IRS Back Taxes

Taxpayers or their legal help can send a request to pay the tax debt in installments through the IRS’ Online Payment Agreement application on the IRS website irs.gov. There are various qualifying factors for applying for a debt payment plan online. Some of them are:

• All tax returns must be filed
• Only individual taxpayers who owe income taxes from Form 1040 can apply
• The tax debt must be $50,000 or less with penalties and interest
• Taxpayers must have the ability to pay off the entire tax debt in 72 months or 6 years

Taxpayers with more than $50,000 in tax debt may use the IRS’ offline resources to pay their back taxes. If taxpayers have any questions regarding the methods of paying back their tax debt, they may call the IRS at 800-555-4477.

IRS Back Taxes Applications: Applying for Installment Agreement

To request an Installment Agreement online through the Online Payment Agreement application, taxpayers must owe $25,000 or less in total, including penalties and interest on tax debt. Taxpayers who owe more than $25,000 in tax debt can fill Form 433F ‘Collection Information Statement’ before the IRS will consider an Installment Agreement. The form includes a disclosure of all bank accounts, bonds, stocks, real estate, and other assets of the taxpayer concerned. It is only after considering a taxpayer’s ability to pay the tax debt based on their financial strength that the IRS makes a decision about the Installment Agreement’s terms and conditions.

After submitting Form 433F, taxpayers will need to file for Form 9465 ‘Installment Agreement Request’ to apply for the payment plan. The IRS usually informs taxpayers on their acceptance or rejection within 30 days.

There is a fee for requesting any debt payment plan. The fee alters for every debt payment plan. For Installment Agreement, the fee is $105 for a standard agreement or payroll deduction agreement, $52 for a direct debit agreement and $43 for those whose income is below a certain level.

Paying IRS back taxes is not difficult, but when exploring payment options, taxpayers must should know the qualifying factors and gather as much information about the payment plan as they can. It is important to hire a competent tax professional to assist taxpayers in research, preparation, and filing a payment plan.