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Business Tax Payment Options for the IRS

Updated: May 13





Last week, we talked about individual payment options with the IRS. Today, we talk about payment plan options if you’re a business. Practical Accounting Solutions is dedicated to helping your business continue to thrive. Be sure to stay up to date as new information unfolds for updates that can help your business during this time. Also, keep in mind the new July 15th tax deadline gives you more time to make a plan! If you’d like help finding the best option for you, contact us today!


The Basics


Overall, the form of your business ultimately determines what taxes you pay and how they are paid. Not sure? Check out this guide by the IRS HERE or make an appointment with us. If you’re looking to make a payment plan, these are the basic pieces of information you will need:


  • Your Identity Information

  • EIN

  • The Date Your Business was Established

  • The Address from Your Most Recent Tax Return

  • Caller ID from Notice (If Applicable)

Based on the Type of Option You’re Requesting, You May Also Need:

  • Balance Due Amount

  • Tax Form Filed or Examined

  • Tax Period Filed or Examined


If you’re already a Practical Accounting Solutions client, we likely have all of this information in our files and can help you put it all together.



Qualify for Your Business Payment Plan


Ultimately, your specific tax situation will determine what you qualify for. As a business, you can qualify for a long-term payment plan (aka installation agreement) if you have filed all of your tax returns and owe $25,000 or less in combined tax, penalties, and interest. If you are a sole proprietor or independent contractor, you’ll apply for a payment plan as an individual. More information on applying as an individual HERE



Ways to Pay


Pay Now


This is the easiest and least expensive option where you pay your balance upfront. There’s a $0 setup fee and no penalties or interest accrued. There are a few different ways to pay, too. You can pay electronically through the IRS’s secure website, by phone using the Electronic Federal Tax Payment System (EFTPS), by check, money order, or debit/credit card (extra fees apply).


Long-Term Payment Plan (Installment Agreement)


If you need to pay in more than 120 days with monthly payments, this is the best route for you. There two different types of installation agreements: automatic withdrawals and non-direct debit. With automatic withdrawals, there is a $31 setup fee as well as accrued penalties and interest until you’ve fully paid your balance. You can pay your monthly balance using a direct debit (called a direct debit installment agreement), and this is the required payment option if your balance is more than $10,000. The other option is Non-Direct Debit. This option has a $149 setup fee with accrued penalties and interest until the balance is paid in full. With this option, you will have to ensure you pay your monthly balance each week. You can pay electronically, through EFTPS, check, money order, or debit/credit card (fees apply).


Revising an Existing Payment Plan


If you’re on a payment plan and you’d like to revise your option. Go to the IRS online payment agreement tool and click the button that says “APPLY/REVISE”. In this section, you can change your monthly payment amount, change the monthly due date, convert your existing agreement to direct debit, or reinstate after default.



Conclusion


Practical Accounting Solutions is here to help you navigate your options when instating a payment plan for your business taxes. We can help you find places to save and take care of any tax questions or concerns you may have. Contact us today!




Resources

Payment Plans Installment Agreements

Practical Accounting Solutions




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Disclaimer: The views presented in this post are meant as educational resources and should not be taken as direct advice for your personal finances or small business. Should you have questions regarding a post relating to your specific finances, please contact us at info@practicalaccountingva.com.


Our primary mission is to maximize benefits to our clients by providing quality, personalized and attentive accounting services. As your trusted advisor, we’re dedicated to doing everything we can to improve your business practices and operations so you can relax and focus on what you do best: growing your business.

Office: 10705 Courthouse Rd, Suite 116, Fredericksburg, VA 22407

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