IRS upgrades online payment system

IRS updates interactive online payment application to make it easier for taxpayers' and their authorized representatives to make changes to installment agreements

The Internal Revenue Service has added new features to its interactive online payment application that make it easier for taxpayers' authorized representatives to make changes to installment agreements.

The Web-based system now lets individuals revise payment due dates and/or amounts on existing agreements in addition to changing existing extensions to regular installment and direct-debit installment agreements. Users also can convert an existing regular installment agreement to a payroll deduction or direct-debit installment agreement. Taxpayers' representatives with valid authorizations can now use the signature date found on their approved Form 2848, Power of Attorney and Declaration of Representative, or the caller identification as an alternate way to authenticate when requesting agreements for clients.

To use the system, individuals need at least 128-bit encryption capabilities with their Web browser. Session cookies and JavaScript must be enabled.

More than 75 percent of those eligible for an installment agreement use the online application. Since its October 2006 launch, more than 30,000 taxpayers have successfully used the payment agreement system, according to the IRS.

Those who can self-qualify to use the system include taxpayers who owe $25,000 or less in combined tax obligations, penalties and interest. Payment options include pre-assessed agreements on tax year 2007 Form 1040 liabilities and paperless direct-debit agreements. To be eligible to use the system, a taxpayer must first file all required tax returns and be current with any applicable estimated tax payments.

The IRS also announced an enhancement to the program in March that allows individuals who have not yet received a bill to establish pre-assessed agreements on current tax year Form 1040 liabilities. A second one allows practitioners with valid authorizations to remain in the application to request agreements for multiple clients.

The IRS also announced in March that it had automated user fee calculations. Previously, taxpayers were required to submit a paper Form 13844 to request a reduced user fee. Eligibility is now determined automatically. Individuals can use the system to pay in full, receive short-term extensions for as long as 120 days, or create a monthly payment plan. Taxpayers who pay within 10 days save interest and penalties.

About the Author

Kathleen Hickey is a freelance writer for GCN.

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