New Installment Agreement Fees Proposed by IRS Effective 2016

Under the proposed fee schedule, the highest fee will increase while new online options will offer discounts.

The IRS has proposed a new schedule of user fees for installment agreements that would take effect on January 1, 2017. Under the new fee schedule, taxpayers who enter into a regular installment agreement with the IRS by filing Form 9465 would pay $225, up from $120. This is the highest fee under the new schedule. However, taxpayers who file Form 9465 can reduce the fee to $107 if they agree to make their monthly payments by direct debit from a bank account.

Alternatively, taxpayers can use the IRS’s Online Payment Agreement application and pay a fee of $149. Taxpayers can reduce this fee to only $31 if they choose the Online Payment Agreement and pay by direct debit.

There would be no change under the new fee schedule to the current $43 rate that applies to qualifying low-income taxpayers. Under these guidelines, which change with family size, a family of four with total income of $60,000 or less would qualify for the lower fee.

Proposed Fees

Regular installment agreement: $225
Regular direct debit installment agreement: $107
Online payment agreement: $149
Direct debit online payment agreement: $31
Restructured or reinstated installment agreement: $89
Low-income rate: $43

The IRS is required to charge a user fee to recover the cost of services it offers to confer a special benefit to taxpayers. It must review these fees every two years to ensure it is recovering its costs. According to the IRS, it has often charged less than the full cost of providing services in order to make those services accessible to more people. However, due to current financial constraints, the IRS can no longer continue this practice, although it will continue to provide reduced-fee and no-cost services to low income taxpayers.

There will be a public hearing on the proposed new fee schedule before the new fees take effect on January 1, 2017.