BLOG: Paying A Big Tax Bill To IRS

By Jim Donovan:  If you owe a big tax bill and you don’t have the cash to pay right now, you may want to opt for an installment payment agreement with the I.R.S.

By paying through an installment agreement, as opposed to taking out a loan or paying with a credit card, you may also likely save yourself some money.  That’s because the interest rate right now that is charged on these agreements is only 3 percent, far less than what most credit cards are charging, and even lower than most home equity loan rates too.

You can enter into an installment agreement for up to $50,000.  (That includes taxes, penalties and interest).

A one-time installment agreement user fee of $105.00 will be charged when you enter into an installment agreement unless you choose to pay through a Direct Debit from your bank account, in which case the user fee is $52.00.

Taxpayers with income at or below 250% of the Department of Health and Human Services poverty guidelines may apply for a reduced user fee of $43.00.

You also may request a short amount of additional time, up to 120 days, to pay in full. This payment arrangement does not carry a fee, however, interest will continue to accrue until the liability is paid in full.

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One Comment

  1. John Moormans says:

    The majority of tax debt relief companies request 1000’s of dollars to solve the debt. That being said DON’T chuck your hard earned cash down the drain! If you’re going to employ tax debt help, shop around first and foremost. Exactly how many individuals were left to the cold once Roni Deutch and JK Harris went down? Get wise concerning this and look for These folks just report tax debt resolution businesses and aren’t too shy to call out the questionable types. If you are in need of specialized tax debt assistance, definitely visit ConsumerTaxReports.Org first of all.

  2. No offense, but this article is could cost a lot of people a lot of money. While it is true that the IRS interest rate for past due taxes is 3%, the penalty that will accrue is much, much larger. General rules of thumb: 1 yr old taxes, growth rate is approximately 20-25%, 2 yr old taxes ~40% growth rate, 3 yr old taxes double in penalty & interest.

    1. Sabin says:

      This is why people are told to wait for their W-2 s. The dfcnereife is probably a deduction for something you have taken out pre-tax like health care or retirement.Did you file it yourself, or with somebody like H&R Block? If you filed through someone else, call them and ask if it was transmitted yet they’re not legally allowed to send it to the IRS without having the W-2.If you filed it yourself, then you know it’s already sent. In that case, you’ll have to file an amended return, 1040X. You can download the form and instructions at It’s not real complex, but must be filed on paper, not efiled.For your state, do it with the correct numbers from your W-2. You might end up with a letter from them too if they do their computer match with the feds before your federal return is corrected.You’re not in trouble with the IRS, but you’ve caused yourself some unnecessary aggravation.Good luck.

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