Installment agreement fee

[Jesse]

Since the IRS issued final regulations increasing the user fees for submitting an installment agreement from $43 to $105 on January 1, 2007 what is the advantage to an installment agreement if the taxpayer can pay off the balance within a month or even a few months?

With an installment agreement they will still have to pay the interest and underpayment fees plus the $105. Without the installment agreement they will still have the interest and underpayment fees without the $105 fee correct?

[jainen]

about your tax bill

>>what is the advantage to an installment agreement <<

In my opinion, the only useful purpose of an installment agreement is to stave off collection action, and that's not a problem for a long time. Besides the cost, you lock yourself into a specific payment schedule that may be hard to keep up. If you can pay in a month or two, do so without any special arrangements.

The first technique is simply to file an extension. I know, they say there is no extension to pay, but it's not true. Although P&I apply, you get an additional six months to pay before the IRS even looks at your return. After you file, IRS sends three letters a month apart. You can safely ignore all those. Interest accrues but there is no additional penalty. Eventually you get a notice titled "Intent to Levy." That's basically a bluff, but most taxpayers don't have the poker skills to call it so I recommend phoning the number on that letter. With any lame excuse you will still get another 30 to 90 days extension. By then the next year is coming due, so it will finally be time to get serious about your tax bill.

[thomtax]

Installment agreement

Jainen,

I knew about the first part of the delaying tactics, but had not had occasion to go beyond the intent to levy. Appreciate the info about handling things from that point forward.

LT

[jainen]

different strategy

That's only if you are going to pay eventually. If you are planning/hoping for bankruptcy, you have to stretch the bill out for three years, which takes a whole different strategy.