By Jim Blankenship
NEW YORK (AdviceIQ) -- Costs of doing business with the Internal Revenue Service recently rose for those needing special arrangements to pay taxes. Here's what to know.
If you can't pay your federal individual income taxes by the deadline of April 15, you may be able to set up special payment plans with the IRS. Some fees rose significantly.
Installment agreements. If you owe the IRS for taxes, penalties and interest and you can't pay the amount in a lump sum now, you can set up an installment agreement. In this, you agree to pay the federal government a set amount monthly until your balance is gone.
If you set up a direct-debit payment plan and pull the payment directly from your bank account, the fee remains unchanged from 2013 at $52. This preferred method to set up such a plan gives the IRS direct access to debit your account for the payment rather than relies on you to make the payment manually, which risks late payment and the resulting penalties.
If you set up your installment agreement so you control sending payment (by paper check, for example), the fee went up this year to $120 from $105, an increase of 14.2%. If you already maintain an agreement with the IRS and need to restructure or reinstate a suspended installment plan, your fee jumped to $50 from $45 (11.1%).
Offer in compromise. In an OIC, you owe a balance to the IRS and petition the agency to settle the debt for less than the original balance due. Sounds wonderful, but it isn't that easy if your debt to the IRS is so great and your assets and income so little that you're unlikely to pay off the debt within what the agency considers a "reasonable" period.