When you owe the IRS and are not able to pay your taxes in a single payment, you can request an installment agreement to have more time to pay your back taxes. IRS payment plans come in many forms, each with their own specific requirements and payment terms.
Sometimes, when you are already on a payment plan, you may find it necessary to modify your plan or even your plan type. We will review all the different ways you can change your IRS payment plan.
The Online Payment Agreement Tool & Changing an IRS Payment Plan
One of the simplest ways to make any changes to an existing IRS payment plan or installment agreement is to use the Online Payment Agreement (OPA) tool. The OPA platform can help you revise your current IRS plan, including payment due date and monthly payment amount.
Any revisions within your approved IRS plan requirements can be accepted as soon as you submit your request online.
In addition to the above, the OPA can also be used to:
- Convert an existing agreement to Direct Debit
- Change a Direct Debit agreement’s account and bank routing numbers
- Reinstate a payment plan after a default (fees may be added for lapsed payments)
For changes that do not meet the terms of your current plan, the OPA will direct you to the IRS form you need to request a change and provide instructions on how to complete it.
In this case, it is best to work with a tax attorney who is knowledgeable about IRS tax relief options and can help you select and get approved for the best payment plan change to resolve your tax debt based on your ability to pay.
Other Modifications to an Existing IRS Payment Plan
In addition to changing payment dates and monthly payment amounts for your IRS payment plan, here are some other changes you can make to existing plans.
Adding a New Balance
If you incur new taxes that you cannot pay after you set up a payment plan, you can opt to add the new balance to your current agreement. Interest and penalties will accrue for the total amount of past-due taxes on your original plan plus any new taxes added.
Interest will not stop until you pay off your full balance.
Changing from a Short-Term Payment Plan to a Long-Term Installment Agreement
A short-term payment plan is designed to resolve smaller tax debts in 180 days or less. Payments can be made by check or money order, debit or credit card, or through the Electronic Federal Tax Payment System (EFTPS).
If taxes owed at some point exceed $50,000, it is possible to switch to a long-term installment agreement with a similar range of payment methods to pay back taxes on a monthly basis but over a longer period of up to 72 consecutive months.
Changing from an Installment Agreement to an Offer in Compromise
When a taxpayer cannot realistically settle a full tax debt with monthly payments, another option is to submit an Officer in Compromise or OIC. For an OIC, the IRS can accept an offer that is less than what a taxpayer originally owed for taxes, penalties and interest.
The IRS may agree to an offer settlement amount in certain situations:
- A justifiable dispute as to the correct amount of the tax debt
- Doubts about the full collectability of the total tax amount
- Recognition that requiring the tax payment in full would cause undue hardship or would be clearly unfair due to extenuating circumstances
Taxpayers who have filed all their tax returns, have been billed for at least one tax debt, and have completed their payments for the current tax year may qualify for an Offer in Compromise.
Changing an IRS Payment Plan to Currently Not Collectible
For taxpayers who cannot cover their basic living expenses and pay off their tax debt at the same time, the IRS can add Currently Not Collectible (CNC) status on their tax account.
CNC is temporary, does not make tax debt go away, and requires proof that the sum of monthly income, available assets, and ongoing expenses does not leave a taxpayer with enough money each month to make tax payments.
Does the IRS Charge a Fee to Modify a Payment Plan or Change Payment Plan Type?
A range of fees apply to different payment plans, and depending on the change, you may have to pay if you modify your payment plan type. Low-income taxpayers may qualify to pay less in fees for changes. Need more help?
You can start online by answering 6 simple questions. You can also call us at 866-568-4593.
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