When it comes to applying for an installment agreement with the IRS, one of the biggest concerns for taxpayers is the cost. However, the IRS does offer a reduced user fee for those who qualify. In this article, we will discuss the application process for a reduced user fee for installment agreements and who may be eligible.
Firstly, let`s define what an installment agreement is. An installment agreement is a payment plan that allows taxpayers to pay their tax debt over time rather than in a lump sum. The IRS charges a fee for setting up an installment agreement, which is known as a user fee. The user fee varies depending on the type of agreement and the terms agreed upon.
To apply for a reduced user fee for an installment agreement, you will need to fill out Form 13844, Application For Reduced User Fee For Installment Agreements. This form is available on the IRS website and can be completed electronically or printed and mailed to the IRS.
In order to qualify for a reduced user fee, you must meet one of the following criteria:
– You must have an income of 250% or less than the federal poverty level.
– You are a low-income taxpayer who is experiencing a hardship, such as unemployment or a significant increase in expenses.
If you meet either of these criteria, you may be eligible for a reduced user fee of $43. However, if you do not qualify, the standard user fee can range from $31 to $225, depending on the type of agreement and the terms agreed upon.
It`s important to note that a reduced user fee does not mean a reduction in the overall amount owed to the IRS. It simply means that you will pay less for setting up the installment agreement.
In addition to Form 13844, you will also need to complete Form 9465, Installment Agreement Request, which outlines the terms of your payment plan. This form can also be completed electronically or printed and mailed to the IRS.
Once your forms are submitted, the IRS will review your application and determine if you qualify for a reduced user fee. If you are approved, you will receive a confirmation letter outlining the terms of your installment agreement and your reduced user fee.
In conclusion, applying for a reduced user fee for an installment agreement can be a great way to save money and make paying off your tax debt more manageable. By understanding the eligibility requirements and application process, you can take advantage of this opportunity and get on the path to financial freedom.