Federal repayment plans and IRS fees

[Opti]

I am wondering about whether IRS fees still apply, once you agree to a federal repayment plan. Per the phone call, I will do a one time set up cost of $43 in July and have agree to the minimum payment of $21/mo. Paperwork apparently will be mailed to me and my employer within 5 to 10 days.

Are there other things I should know? This will delay repayment in the short term, but also make working over 22 hours & 4 days not a short term income loss either. (Still costs money to drive to work when I work 5 or 6 days a week for 30 hours/week or less)

FWIW. This is a win for me. The phone call total time, was less than one hour, and the financial penalty of picking up another 4 or 6 hour shift in a week won't be a net loss to bi-weekly take home pay.

(In July or August, but that works for me.)

[The Captain]

Opti - this is actually an area I have little experience with, so your postings and information on the process is appreciated!

[Bonny]

What interest rate are they charging and what is the expected pay-off date?

You need to be careful if your minimum payment is less than the interest. As some people may recall one of the issues I had to deal with when my mom passed away was how to handle her IRS debt. Her original debt totaled about $25k however over a nearly 10 year period of time that amount ballooned to about $40k because her minimum payment she had negotiated was only $200. And that's what she paid.

Also are they filing a lien for the unpaid amount? If they have it will affect your credit score.

Finally, if something happens and you cannot pay call them immediately and make other arrangements so they don't garnish your wages like they did to an idiot former tenant of mine.

[Ombud]

yes, installment agreements can reduce penalties & interest. Sweet deal if you keep it up

[NoNamePerson]

Don't know how you are paid, but be sure and keep your records of the garnishment. That way you can prove it was withhheld in case your employer doesn't transmit to the proper agency in a timely manner. Just a thought!! 

Are you paid monthly? Just make sure they aren't withholding it every pay period if you are paid weekly, etc.

Bonny

Finally, if something happens and you cannot pay call them immediately and make other arrangements so they don't garnish your wages like they did to an idiot former tenant of mine

I may not understand the OP but I think her wages are being garnished since she said IRS was sending paper work to her and her employer.

[Bonny]

Jun 20, 2015 20:35:36 GMT -5 NoNamePerson said:

Don't know how you are paid, but be sure and keep your records of the garnishment. That way you can prove it was withhheld in case your employer doesn't transmit to the proper agency in a timely manner. Just a thought!! 

Are you paid monthly? Just make sure they aren't withholding it every pay period if you are paid weekly, etc.

Bonny

Finally, if something happens and you cannot pay call them immediately and make other arrangements so they don't garnish your wages like they did to an idiot former tenant of mine

I may not understand the OP but I think her wages are being garnished since she said IRS was sending paper work to her and her employer.

Perhaps. Or the OP and the IRS agreed to an automatic deduction from her paycheck. She didn't state that her wages were garnished.

[NoNamePerson]

You could be right. I just always considered it a garnishment when papers hit my desk to set up deductions and submit to 3rs party - to many years of doing payrolls. So maybe not a garnishment but what you said. 

[Bonny]

Jun 21, 2015 14:34:18 GMT -5 NoNamePerson said:

You could be right. I just always considered it a garnishment when papers hit my desk to set up deductions and submit to 3rs party - to many years of doing payrolls. So maybe not a garnishment but what you said. 

LOL well the odds are in your favor.

I guess I was lucky that when I did payroll I never had to deal with any garnishments that I can remember. But that was for a group of lawyers. I suspect that they were pretty good about not letting their tax payments get out of hand!

[NoNamePerson]

Jun 23, 2015 13:07:44 GMT -5 Bonny said:

Jun 21, 2015 14:34:18 GMT -5 NoNamePerson said:

You could be right. I just always considered it a garnishment when papers hit my desk to set up deductions and submit to 3rs party - to many years of doing payrolls. So maybe not a garnishment but what you said. 

LOL well the odds are in your favor.

I guess I was lucky that when I did payroll I never had to deal with any garnishments that I can remember. But that was for a group of lawyers. I suspect that they were pretty good about not letting their tax payments get out of hand!

A lot of my bookkeeping was done for construction companies.    Even years spent with CPA had a few clients we did payroll for Did I mention that I hated doing payrolls  

[ArchietheDragon]

Jun 23, 2015 15:16:00 GMT -5 NoNamePerson said:

Jun 23, 2015 13:07:44 GMT -5 Bonny said:

LOL well the odds are in your favor.

I guess I was lucky that when I did payroll I never had to deal with any garnishments that I can remember. But that was for a group of lawyers. I suspect that they were pretty good about not letting their tax payments get out of hand!

A lot of my bookkeeping was done for construction companies.    Even years spent with CPA had a few clients we did payroll for Did I mention that I hated doing payrolls  

The company I work for employs union journeymen, meaning they move between companies very easily.  With some guys,  as soon as the garnishment paperwork catches up, they move to another company, so they are always staying one step ahead of the garnishment. 

[NoNamePerson]

Jun 23, 2015 15:19:48 GMT -5 ArchietheDragon said:

Jun 23, 2015 15:16:00 GMT -5 NoNamePerson said:

A lot of my bookkeeping was done for construction companies.    Even years spent with CPA had a few clients we did payroll for Did I mention that I hated doing payrolls  

The company I work for employs union journeymen, meaning they move between companies very easily.  With some guys,  as soon as the garnishment paperwork catches up, they move to another company, so they are always staying one step ahead of the garnishment. 

They have to move fast now. Within 10 days of New Hire filed online we would get paper but back child support garnishment seem to hit first. But that was the reason New Hire was implemented. Pain in the a@@.   The garnishment not the new hire!

[rangerj]

Note: The interest rate the government charges is provided for by statute and is adjusted quarterly, by statute, aka the "applicable federal rate". The interest rate is a market rate of interest. Until the tax is paid with the interest, the government, via statute passed by Congress, can charge the failure to pay penalty and it increases 1/2% every month until the amount  (rate) hits the maximum provided for in the statute (25% if I recall correctly). If the return has not been filed the failure to file penalty is also applied and the combined penalties top out at 37.5%, again if I recall correctly. The two penalties top out at 25% each, but are mutually exclusive and the combined total would be as stated when both are applied. This percentage amount of penalty would balloon a debt in a hurry. There is a provision in the penalty statute that allows the IRS to abate the penalties for a good reason, for example a serious illness or a catastrophic event. This should be explored. Then there is the offer in compromise as a means to "settle" the debt. Also note that the interest CANNOT be abated, but can be "settled" in an offer in compromise. Food for thought.  

[Bonny]

Jun 27, 2015 19:58:56 GMT -5 rangerj said:

Note: The interest rate the government charges is provided for by statute and is adjusted quarterly, by statute, aka the "applicable federal rate". The interest rate is a market rate of interest. Until the tax is paid with the interest, the government, via statute passed by Congress, can charge the failure to pay penalty and it increases 1/2% every month until the amount  (rate) hits the maximum provided for in the statute (25% if I recall correctly). If the return has not been filed the failure to file penalty is also applied and the combined penalties top out at 37.5%, again if I recall correctly. The two penalties top out at 25% each, but are mutually exclusive and the combined total would be as stated when both are applied. This percentage amount of penalty would balloon a debt in a hurry. There is a provision in the penalty statute that allows the IRS to abate the penalties for a good reason, for example a serious illness or a catastrophic event. This should be explored. Then there is the offer in compromise as a means to "settle" the debt. Also note that the interest CANNOT be abated, but can be "settled" in an offer in compromise. Food for thought.  

The highlight item is a good suggestion for Opti to explore. IIRC, Opti has no assets and is working several part-time jobs.