You’ve committed to paying off your IRS installment agreement. Unfortunately, circumstances have changed since you first set it up, and now, you need to adjust accordingly. It’s possible to revise your installment agreement, but the process will be easier if you follow these do’s and don’ts:
Do: Use the Online Payment Agreement Tool
The IRS offers an easy-to-navigate online process for revising your installment plan. This has changed slightly in response to the Taxpayer Relief Initiative, which allows many who previously were not eligible to add new tax balances without providing financial substantiation.
Don’t: Automatically Opt for the Long-Term Plan
The IRS recently expanded the scope of the long-term payment plan to provide up to 180 days to pay off your balance in full. Consider taking advantage of this option, as it allows you to avoid setup fees associated with long-term plans.
Do: Take Extra Interest from 2020 Into Account
Was your installment plan temporarily suspended in 2020 due to the pandemic? While you may have appreciated the brief break from installments at the beginning of the COVID era, it wasn’t all positive: interest continued to accrue during this time.
Unfortunately, no adjustments will be made to account for interest accrued during COVID-prompted installment suspensions. You can continue to pay at the same monthly rate, but as additional interest adds up, it may take longer for you to finish your plan. If you’re able to handle higher installments, consider adjusting your payments so you can avoid further interest.
Don’t: Go it Alone If You’re Confused
Installment agreements can be frustrating in the best of times, but recent changes brought about by the pandemic make this process even more nerve-wracking. If you’re worried about your ability to pay installments or deal with the long-term implications of the Taxpayer Relief Initiative, let an enrolled agent serve as your guide.
Highland Tax Group can assist you with the process of setting up or revising your installment agreement. Contact us today to learn more about our tax resolution services.