Mortgage Rate News

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One of the things you can do if you can’t pay your taxes is to set up a payment plan with the IRS. This is a way for you to fulfill your tax obligation without completely breaking the bank. The interest charged on a loan from the IRS is usually lower than what you would get if you got the loan from a bank or payday loan place, or put it on a credit card.

However, there is a question many have as to what happens when it’s refund time. Unfortunately, reports Chris Bibey at the U.S. Tax Center, you won’t get that refund:

As a condition of your installment agreement, any refund that you should receive in the future will be applied against the amount that you owe. In other words, you are not going to receive any money. Instead, the IRS will take it and put it towards what you owe. While this may sound like a scam, it is actually a good thing because it will speed up the debt repayment process.

This does not mean you should stop paying the agreed upon monthly payment. Instead, stick with this as usual and wait for the IRS to automatically apply your refund. Once this is done you can then see how much your remaining balance is.

It’s a really good idea, in actuality. It helps you get out of debt to the IRS faster, and prevents you from taking refund money and spending it on something else. Plus, the faster you pay off your debt, the less you pay in interest. That is a big a consideration as well. Once your tax debt is taken care of, you will start receiving your tax refund again, on schedule.

Really, this is a sign that the IRS isn’t so bad after all. You can get a loan on reasonable terms to pay your taxes if you owe more than you can pay, and the IRS will help you automatically pay down your debt in the fastest method possible — saving you money.