The Internal Revenue Service kicked of 2014 with many changes. This includes minor changes to the Offer In Compromise program (OIC), which is one way taxpayers can settle tax liabilities for less. The IRS also made minor changes to the fees charged for processing installment agreements as well as an Offer In Compromise.
IRS Offer In Compromise Changes
Effective since the beginning of January, the IRS changed the Offer In Compromise program in two ways:
- The fee for processing an Offer In Compromise (regardless if it is accepted) has been raised 24% from $150 to $186 dollars. However, there is still no processing fee if you are applying for an Offer In Compromise and the taxpayer qualifies for the low-income exception.
- The Lump-Sum Offer in Compromise option now requires the remaining balance to be paid in five months or less (previously 24 months).
IRS Installment Agreement Changes
Starting at the beginning of this month, the IRS also made changes to fees charged to Installment Agreements. They are as follows:
- The fee for requesting an installment agreement rose by will increase by about 14% from $105 to $120 dollars.
- The fee for restructuring an installment agreement will rise by about 11% from $45 to $50.
The fees for a taxpayer that qualifies as low-income to request an IRS Installment Agreement will still be $43 dollars. Moreover, taxpayers who setup an installment agreement can avoid the installment agreement request fee increase by making their payments each month via direct debit (as opposed to other payment options). The direct debit installment agreement fee has remained at $52 dollars.
Many critics will complain about the fee increases pertaining to Offers in Compromise or Installment Agreements. However, this is the first time in the IRS has raised fees since 2007. Remember, the fees for low-income taxpayers and the fees to process an installment agreement via direct debit has not increased. In fact, it costs the IRS more money to process an OIC or Installment agreement they what is charged.