Question : What is the interest rate for payment on an IRS tax audit?
I owe 15,000 from an 05 audit. I have the money but would rather make monthly installments on the money. I have good credit. First off would they let me make payments if I could pay it off in full? Secondly, what is the interest rate that they charge and are their hidden fees?Indiana what are you talking about?
- asked by Jon
All Answers:
Answer #1
If you have the cash, the IRS will want it to payyour tax. If they agree to payments the interestwill be 10% and you can't get that at a bankaccount.
- answered by Mark C
Answer #2
Look at it another way:If you didn't have anymoney, would you take out a loan from the IRS (andrisk their wrath) in order to put cash in thebank?It's the same thing, because in both cases,you have the debt to the IRS and the cash.
- answered by Jeff T
Answer #3
The current interest rate is 5% along with apenalty rate. If you filed your return on time,the penalty rate is 1/4 of 1% monthly. Yourminimum monthly payment would be around $250 witha one time setup fee of $105.While the IRS wouldlike to have you pay this off in full--and it'susually to your advantage to do so-- they can'trequire you to if your balance is less than $25kand you meet their minimum monthly paymentcriteria.
- answered by John Scott
Answer #4
The IRS interest rate is equal to the rate paid onthree month treasury notes plus three percent. That rate is currently 5% and can change everythree months. In addition to this there is apenalty for late payment of 1/2% per monthstarting 11 days after you get your bill for theaudit deficiency. This is reduced to 1/4% permonth when your installment agreement is approved. If you sit on your hands until you get anastygram threatening a levy on assets the rategoes up to 1% per month. In all cases, themaximum penalty is 25% of the unpaid tax. Thereare no "hidden fees" but there is a processingfee of $105 for an installment agreement. Thisdrops by over 50% if you approve direct debitingfrom your bank account. An installment agreementwill be approved automatically if you can pay infull within five years. In your case a payment of$300 would be about right.
- answered by wartz
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