What will happen if the taxable person does not comply with the terms of the instalment payment agreement? Instalment payment agreements by direct debit and salary deduction allow you to automatically make payments in a timely manner and reduce the possibility of payment defaults. These comfortable payment methods also allow you to avoid the time and cost of sending monthly payments. If you are a low-income taxpayer and agree to pay by direct debit (from a checking account), you are entitled to a waiver of the user fee for the instalment payment. A low-income taxpayer who is unable to make electronic payments through a debit instrument by entering into a DDIA is entitled to a refund of the reduced user fee of USD 43 after the conclusion of the instalment payment agreement. See line 13c, later, for more details. By accepting your request, we agree that you pay the tax you owed in monthly instalments, instead of immediately paying the full amount. In return, you agree to make your monthly payments on time. You agree to provide updated financial information upon request. If you apply for a payroll withdrawal agreement with Form 2159, your user fee is $225. If you are a low-income taxpayer, you will find more information about reduced rate subscription fees later. If you can pay the full amount due within 120 days, you can avoid paying the fee for setting up a phased contract.
You can request a short-term payment plan if you can pay in full within 120 days using the OPA app under IRS.gov/OPA or by calling the IRS at 800-829-1040. Typically, the fee is $US 89 to change your instalment payment contract ($US 43 if you are a low-income taxpayer). However, as of January 1, 2019, the user fee is $10 for instalment payment agreements recovered or restructured through a takeover bid. This user fee only applies if the instalment contract has been reinstated or restructured by a takeover bid. You will be charged interest and a late payment penalty for each tax that is not paid by the due date, even if your request for payment in instalments is accepted. Interest and any penalties are calculated until the balance is paid in full. For more information, see Theme 653, IRS Communications and Invoices, Penalties, and Interest Charges IRS.gov/TaxTopics/TC653. To limit interest and penalties, file your tax return on time and pay as much tax as possible with your return or termination. All payments received under the instalment payment agreement will be transferred to your account in the best interest of the United States. Your specific tax situation determines the payment options available to you. Payment options include full payment, a short-term payment plan (payment in 120 days or less) or a long-term payment plan (instalment payment contract) (payment in more than 120 days).
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