Tax Payment Plan

Income taxes have an old history just as old as that of human civilization. They have always been the back of governments throughout history, whether they are despotic or monarchical to communists to democracies and federal governments run by popular choice. So governments rely completely on the taxes collected from a plethora of incomes and sources to meet the running cost of its infrastructures and other needs. Thus ensuring that the due taxes are paid by everyone liable to do so is an important duty of the government. And thus it has agencies like the IRS in United States to look after the tax collection and punish those who do not pay their taxes or pay lesser than their due.
But all this punishment makes no sense for those who find it difficult to pay their due tax within the stipulated time due to financial difficulties. Since these people or institutions have no ill intention and so the IRS came up with a variety of solutions for these people who file correctly for their taxes but are unable to pay it in due time.
This article discusses the various tax payment plans and avenues which are available for the payment of outstanding as well as normal federal tax liability.  Here it is important to note that many people think that since the outstanding taxes are subject to interest which are compounded daily an also a monthly late payment penalty may be added to it they do not file their taxes to avoid it. But that doesn’t help instead it makes the case worse since more penalties are added to those who do not file for taxes added to the late payment interests and all. So it is always better to file for return whether you are able to pay it or not.
There are various tax payment plans available for the payment of overdue federal income tax liabilities. There are many ways of paying your tax, nowadays you can pay tax electronically and also send checks or money orders in favor of “United States Treasury”. Using these options you can either pay the full amount or whatever amount you are able to pay if you cannot fully pay for the outstanding tax liabilities. Also do not forget to mention your social security number while making such payments.
Another interesting thing to note here is that you can pay your outstanding taxes by taking loans and also on your credit cards since the amount that these banks usually charge is lesser than the total amount of interests and penalties that you have to pay as per the Internal Revenue Code on your outstanding taxes. Also there are schemes available by the IRS, which allow you to extend the tine to pay your tax in full from 10 to 120 days.
Another great tax payment plan is the installment agreement system by the IRS. This service enables you to enter into an agreement under which an installment fixed by you is regularly deducted from either your bank account as direct debit or as a regular installment plan or most commonly as a payroll deduction from your employer. An important thing to remember while filing for this system is that the amount of installment that you agree to should be an amount which you can pay and whose payment you can maintain over the time period of the installment agreement.
To reduce the possibility of defaulting in paying the installment of your agreements regularly direct deduction from your bank account and payroll deductions can be used since these make payments automatically.
There are two ways of entering the installment agreements. Firstly you can request an agreement using the form 9465 or you can write your own request for tax payment plan attached to the front of your tax return. Secondly, if you want to enter into a agreement after you have filed your tax return and you have received an tax due notice, you can use the Online Payment Option application available in the IRS site or download the 9465 form to request an agreement. In the application you can mention the amount of the installments and the day of the month you will like to pay the amount (limited form the 1st to the 28th of the month). The IRS generally responds to such request within 30 days, they may ask you provide more information and also inform you about whether your tax payment plan agreement is accepted or not.
After the agreement has been a one time service charge is deducted this charge varies for $105 to $52 depending upon the payment option and those with gross income below a certain amount can claim for a reduction to $43.