IRS Increases Installment Agreement Fees

by Mike Godfrey, Tax-News.com, Washington

15 November 2006

The US Internal Revenue Service on Monday announced increases in user fees for installment agreements.

The increases are the first since the fees were implemented in 1995, and result from increases in labor and other costs of processing the various applications.

The Office of Management and Budget has directed federal agencies to charge user fees reflecting the full cost of goods or services “that convey special benefits to recipients beyond those accruing to the general public”.

Effective from January 1, 2007, the following fees will increase:

• The fee for new direct debit installment agreements, where payments are deducted directly from a taxpayer’s bank account, will increase from $43 to $52.
• The fee for other new installment agreements will increase from $43 to $105.
• The fee to restructure an existing or reinstate a defaulted installment agreement will increase from $24 to $45.

The new fees will also apply to installment agreements made using the Online Payment Agreement application.

According to the IRS, in fiscal year 2006, almost 2.8 million taxpayers established installment agreements to pay their tax bills.

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