User Fee for an Installment Agreement

If a taxpayer cannot pay his delinquent or current taxes in full or within 120 days, he can enter into a payment plan with the IRS to full-pay the tax over time. This is called an Installment Agreement.   The IRS used to charge a user fee of $43.00 to set up the account for the Installment Agreement.  However,

 

several years ago, this fee was increased to $105.00.  Unlike the application fee for the Offer In Compromise, which will be charged and must be paid by check when you submit the Offer for consideration, this fee is not charged until after you submit your request for the Installment Agreement and it is accepted.  If your monthly payment is greater than $105, the IRS will simply deduct the fee from your first payment.  If your fee is less than $105, then you must pay the set-up fee with your first payment.  If the taxpayer’s income meets certain low-income levels, the fee may be reduced or even eliminated.  This is determined on a case-by-case basis.  Remember that with an Installment Agreement, interest will continue to accrue on the unpaid balance until the total amount is paid in full.