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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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