Given the current economic dilemma facing taxpayers as a result from the COVID19 pandemic, many taxpayers may be looking at a tax balance owed for their 2019 taxes that they are unable to pay in full in 2020. If you are faced with a tax balance due for your income taxes and you cannot pay the balance owed in full, you are most likely eligible to pay the government in periodic installment payments. The IRS allows taxpayers to apply for a payment plan by either completing a Form 9465, Installment Agreement Request, with the tax return filing or going to the IRS website and completing the payment plan online at the following link:
The IRS will generally notify taxpayers within 30 days if the payment plan is approved or denied. The payment period for the IRS installment agreement plan cannot exceed 72 months.
Generally, depending on the balance owed, taxpayers have the option of making their monthly payment either via direct debit from their bank account or by paying by check. If you choose to pay by check then each month you will receive a notice from the IRS showing the remaining tax balance owed, plus the due date and amount owed of your next payment. Alternatively, if you choose to have your payments automatically withdrawn from your bank account via EFT, you will not receive a monthly notice – the IRS will send you an annual statement showing the amount you owed at the beginning of the year, all payments made during the year, and the amount you owe at the end of the year.
There is a user fee to set up an installment agreement with the IRS. The fee ranges between $31 – $225 depending on whether the taxpayer sets up the plan using the IRS online payment application or not and whether monthly payments will be mailed in with a check or paid via EFT. Setting up the plan using the IRS online payment application and making payments via EFT will result in the lowest fee. Taxpayers can avoid the set-up fee if the full amount owed is paid within 120 days by applying online for a “short-term payment plan”.
Additionally, Massachusetts also offers an installment agreement for MA taxpayers. There are two ways to set up a payment agreement in Massachusetts. The first option for MA taxpayers is to go to the MassTaxConnect website to set up a payment plan on their own for payment agreements of $5,000 or less. The second option for taxpayers is to call either the Massachusetts Department of Revenue Contact Center at (617) 887-6367 (for tax liabilities of $5,000 or less) or the Massachusetts Department of Revenue Collections at (617) 887-6400 (for tax liabilities greater than $5,000).