According to the IRS, a tax payment plan is a way for individuals to make payments on their taxes in monthly installments. As long as taxpayers pay the full amount owed, they can avoid or lower the amount of interest and penalties owed as well as the fees required to set up the payment plan.Continue Reading
In order for a payment plan to be set up, a taxpayer first has to complete and return all of the necessary tax returns, notes the IRS. The taxpayer also has to owe $50,000 or less in interest, penalties and individual income tax to qualify for a payment plan. In the case of a business, the owner can't owe more than $25,000 in payroll taxes. Even individuals who owe more than the stated amounts may possibly be able to pay their taxes in installments.
Taxpayers continue to pay interest and penalty fees until they have fully paid off all of the taxes. Anyone who goes into default on the payment plan may have to pay a reinstatement fee to be put back on a payment plan. Individuals should contact the IRS as soon as possible if there is a possibility they may default on their payment agreements, states the IRS.Learn more about Taxes