The Internal Revenue Service (IRS) Online Payment Agreement (OPA) is a program that allows taxpayers to pay their federal taxes in installments instead of all at once. This can be a helpful option for those who are unable to pay their taxes in full by the due date or those who prefer to pay in smaller, more manageable increments.
To qualify for an OPA, taxpayers must owe less than $50,000 in combined tax, penalties, and interest and must have filed all required tax returns. Additionally, taxpayers must agree to comply with all future tax obligations, including timely filing and payment of taxes due.
To apply for an OPA, taxpayers can either use the IRS`s Online Payment Agreement application or complete and mail Form 9465, Installment Agreement Request. The online application process is typically faster and more convenient, allowing taxpayers to set up an agreement and make payments all in one place.
Once approved for an OPA, taxpayers can choose from a variety of payment options, including direct debit payments, online payments, or mailing in a check or money order. Direct debit is the most convenient option, as it automatically withdraws the money from the taxpayer`s bank account on a pre-determined date each month.
It is important to note that there are fees associated with setting up an OPA. The fees vary depending on the payment method chosen and whether the taxpayer qualifies for reduced fees due to financial hardship. Taxpayers can also face penalties and interest for late or missed payments.
Overall, the IRS Online Payment Agreement can be a helpful option for taxpayers who are struggling to pay their federal taxes. However, it is important to carefully consider the fees and obligations associated with the program before applying. As always, taxpayers should consult with a qualified tax professional to determine the best course of action for their unique situation.