The Internal Revenue Service (IRS) has a plan set in motion that helps people who tend to pay their taxes early. According to law, the IRS will try to assess penalties to all tax payers for both failing to file a tax return and for not paying the taxes they owe by the deadline. If you can’t pay for the tax you owe before your original filing due date, the balance may be subject to interest plus a monthly late payment penalty. There also exists a penalty for missing to file a tax return. Due to all of this, we encourage you to file in due time even if you are not able to pay your balance in full. Folks paying their taxes in due time is always encouraged in order to avoid any type of additional charges.
How can I determine if I qualify for an IRS Payment Agreement?
The IRS understands that many are not able to pay their taxes completely on the first try, there are options for that. It is called the IRS Payment Agreement and there is a way to determine whether you are eligible for this plan or not. Everybody has a specific tax situation that will help them determine if they are eligible for this plan. Multiple payment options are available for people. These include full payment, short-term payment plan that consists on paying over the next 180 days or less. Last but not least, there is the long-term payment plan that consists on monthly installments. Individuals have a better chance to qualify for this plan. But some businesses also qualify.
If you are an individual, you can qualify by applying online for a long-term payment plan if you owe $50,000 or less in combined tax, penalties and interest. For short-term payment plans, you can apply for this if you owe less than $100,000. Businesses only get a chance to use the long-term payment plan of they owe $25,000 or less. Sole proprietor or independent contractors are considered individuals, regardless of how big their business can be.