If you owe federal or state back taxes, learn how the Larson Tax Relief team can help negotiate an installment agreement with the IRS on your behalf.
About Larson Tax Relief
Established in 2004, Larson Tax Relief offers tax resolution services to individuals and small businesses in all 50 states. The firm is a family-owned and operated entity with a team of 65 employees, and 17 federally licensed IRS Enrolled Agents.
Larson Tax Relief is accredited by the Better Business Bureau (BBB) with an A+ rating and zero complaints. Co-founder, company president, and Enrolled Agent Jack Larson is also a member of the National Association of Tax Professionals and the National Association of Enrolled Agents.
Tax Installment Agreement Services
Suppose you owe federal or state back taxes. In that case, the team at Larson Tax Relief can help negotiate an installment agreement with fair terms or other effective resolution with the IRS or state taxing authorities on your behalf.
What is a Tax Installment Payment Plan?
A tax installment payment plan allows you to pay down your tax debt over a set period. These plans can be negotiated with both the Internal Revenue Service (IRS) and state taxing authorities.
How Do Tax Installment Payment Plans Work?
With an installment plan, you can settle your tax debt over several months and avoid further/accelerated collection activity, like federal tax liens and IRS levy action.
The IRS offers two primary payment plans:
- Short-term Payment Plan: Consider this plan if you’re able to pay your outstanding balance within a 120 to 180-day window. The amount owed, including penalties and interest, must be less than $100,000 to qualify for a short-term payment plan.
- Long-Term Payment Plan: Also referred to as an installment agreement, this plan gives you up to 72 months (six years) to pay your tax liability. You may qualify for a long-term payment plan if you owe $50,000 or less (with penalties and interest). Businesses are also eligible for long-term payment plans if they have filed all required tax returns and owe no more than $25,000 with penalties and interest. (If you’re a sole proprietor, the qualification criteria for individuals apply to you).
- Extended-Term Payment Plan: May be negotiated by firms like Larson Tax Relief, and will be based on your income, liabilities, expenses as well as IRS’ allowable expenses outlined in their national standards of living. These are payment plans that are not based on a number of months offered by the IRS, but moreover based on what the client can actually afford once their income and bills are taken into account.
Tax installment payment plans for unpaid state taxes vary, but are typically based on income and expenses. Contact your state’s department of revenue or taxation to learn more.
Minimum Monthly Payments
The minimum monthly payment for long-term payment plans is established by the IRS and varies by individual or business. Generally, you can estimate this figure by dividing your balance by 72 months. The minimum monthly payment on installment plans for unpaid state taxes varies by state.
Fees and Costs for IRS Installment Payment Plans
The fees and costs for IRS installment payment plans are as follows:
- Short-term Payment Plan: $0 setup fee if you apply online, by phone or mail, or in-person
- Long-term Payment Plan with a Direct Debit Installment Agreement (DDIA): $31 setup fee if established online, or $107 if you apply by phone, mail, or in-person
- Long-term Payment Plan without a DDIA: $149 setup fee if established online, or $225 if you apply by phone, mail, or in-person
You will also be responsible for accrued interest and penalties until your account balance is paid off. And if you meet the criteria for low-income individuals, you could qualify for a reduced $43 setup fee.
Ways to Pay for Your Tax Installments
If you’re enrolled in a short-term payment plan, you can pay your outstanding balance using one of these methods:
- Use the Direct Pay feature to pay from your checking or savings account (available to individuals only)
- Remit payment by debit or credit card, check, or money order (note: fees apply for card payments)
- Enroll in the Electronic Federal Tax Payment System (EFTPS) and pay online or by phone
Long-term Payment Plan installments under a DDIA are automatically deducted from your checking account each month. But if you have a long-term payment plan without automatic monthly payments, you can pay your tax installments by:
- The Direct Pay tool that allows you to pay from your checking or savings account
- The EFTPS system when you enroll
- Using your debit or credit card, writing a check, or paying by money order
How to Apply for an Installment Payment Plan
You can apply for an installment plan on the IRS website or by calling the IRS directly at 1-800-829-1040.
You’ll need the following to apply as an individual:
- Your name and address (as they appear on the most recent tax return you filed)
- Your Social Security number or Individual Tax ID Number
- Your email address
- Your date of birth and filing status
- Your total balance due (if applicable)
- Your financial account number, mobile phone number (registered in your name), or your activation code to verify your identity
The IRS requires this information if you’re applying as a business:
- Identity verification information (listed above in the last bullet point)
- Your Employer Identification Number
- Your address (as it appears on your most recent tax return)
- The month and year your business was established
- Your Caller ID from the notice sent by the IRS
- Your total balance due, tax period filed or examined, and tax form filed or examined if applicable
Contact your state department of revenue or taxation office to inquire about the application process for an installment payment plan.
If you’re overwhelmed by tax debt, call the professionals at Larson Tax Relief for assistance. A dedicated tax expert can help you navigate the complexities of IRS and state tax payment options, discuss potential resolutions, and help you devise a plan of action to move forward and get the relief you need.
How to Review and Update Your Installment Payment Plan
You can review and update your IRS installment payment plan through the Online Payment Agreement tool. This feature allows you to change your monthly payment amount or due date, change your existing agreement to a Direct Debit agreement and update your bank routing and account number on your current Direct Debit agreement. If you default on your installment payment plan, you can also use the tool to request a reinstatement.
Be mindful that a $10 fee applies to change an existing payment plan online. If you wish to make changes by phone, mail, or in-person, the fee is $89.
Low-income taxpayers pay a $43 fee to make changes and $0 for DDIA modifications. However, the fee may be reimbursable under certain circumstances.
Other Larson Tax Relief Services
Larson Tax Relief is a one-stop shop for taxpayers and businesses who seek emergency and long-term tax relief. Their team of skilled professionals can defend you against the IRS and state tax authorities if you owe back taxes or are behind on tax filings and returns. These are some of the tax relief services they offer aside from tax installment agreements.
- Offers in Compromise
- Currently Not Collectable Status
- Partial Payment Installment Agreement
- Business Shut-downs
- 941 Trust Fund representation
Fill out the form online or call 833-833-4151 to get a free evaluation or learn more about their business tax relief, IRS tax relief, income tax relief, state tax relief, and emergency bank levy solutions.