IRS to Charge Fee for Paying Tax Bill in Installments

The Internal Revenue Service has a new wrinkle for taxpayers: a fee for paying federal tax bills on installment plans.

The agency on Tuesday proposed regulations that would allow it to begin charging $43 a year for new installment-plan payers.

Taxpayers already paying in installments won’t escape the charges, either. The IRS plans to impose a fee of $24 for payment plans that are renewed or restructured. The fees will begin in March.

An estimated 2.7 million taxpayers will ask to pay their tax bill in installments for the fiscal year ending Oct. 31, an IRS spokeswoman said.

If half that number of taxpayers were approved for installment plans, the IRS would take in more than $58 million from the charges.

The agency said it needs the cash to cover costs associated with setting up individual installment plans. They include determining whether installment payment is appropriate, setting up a schedule, processing the payments and making sure the taxpayer sticks to the plan.

A public hearing on the plan is set for Jan. 20, but there’s little chance of persuading the agency to reconsider the fees, the spokeswoman said.