mm IRS interest requirements on late payments

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barelynangel -> mm IRS interest requirements on late payments (4/15/2009 5:00:38 AM)
Okay what i am going on here is a friend of mine who has to pay unexpectedly (he got a 2nd job and didn't remember it costs him in taxes so he didn't change his withholding) $200 instead of a refund this year. Since he literally just got done moving last week and paying all the expenses etc for that he isn't able to pay this right off the bat and so asked for a payment plan with the IRS. He said he will end up paying an additional $109 in interest (As i am not in such a situation, i don't know if he was exaggerating this or not but am going with he wasn't) over the course of the next 10 months or so paying 30 bucks a month. Now this isn't about how he should pay it because i told him already pay the whole thing in the next month to avoid the interest. Also a disclaimer i am only going on what he told me, he could have been exaggerating the amount of interest but not sure. But my observation is based on the irony that i am not sure about what to think. In this economy we have unemployed people, people who didn't get raises, people who have taken pay cuts, people who lost houses, and people who have acquired debt becaue of the economy. So i presume a lot of them will have trouble paying their taxes if they owe this year. The IRS i don't think has changed the way they apply interest to people who pay their taxes late. Do you find it ironic that the very government giving us back money in stimulous over the last year in lump checks and now in our paychecks and are bailing out company's many who are paying bonuses with tax payer's money, will be charging what looks like 50% interest to people who are unable to pay their taxes on time? On one hand i don't understand it at all and feel if people can't pay it well duh there should be some type of understanding and a very low if not at all interest applied to same. On the other hand for people paying on time or who have paid the correct taxes over the year so they get a refund, i say why should these people get a relief or the IRS changing the way it applies interest to late payments. If they would hell i would have changed my circumstances that would have giving me a payment on April 15, 2009 and more money in my pocket over the year, and spread out the payment with no real penalty. Just curious on how others think about the interest the IRS applies to late paid taxes. angel

samboct -> RE: mm IRS interest requirements on late payments (4/15/2009 10:36:44 AM)
I have to deal with the IRS for some late taxes as well. Basically there's a setup charge for an installment plan on taxes- for amounts less than $35k IIRC which is ~ $100. If you're at the lower end of the bracket, they'll do an automatic deduct for around ~$43. They are charging interest, but the penalties appear to be minimal if you file on time. Alternatively, he should just bum $200 and offer to pay it back with dinner on top. Sam

LaTigresse -> RE: mm IRS interest requirements on late payments (4/15/2009 10:59:50 AM)
Oye can I tell you about the IRS. But I will spare you the novel. Yes, they can and do charge an outrageous interest. And fees, and penalties and anything else they can come up with. If you do not pay....they can freeze your bank accounts, contact your employer and force them to deduct money from your pay, put liens on your home or business, take your home or business.......you name it, they can do it. Depending on the state, they can be equally evil. Contacting them via phone.........PURE HELL!!! Contacting them via letter..........also PURE HELL!!! Tell him to pay the balance as soon as he possibly can. Then, to avoid further issues, if he feels it may happen next year, have his employer take a little extra out of each paycheck. And lastly, avoid crooked accountants that look like they might disappear after doing your taxes, taking all the paperwork with them..........[:D]

barelynangel -> RE: mm IRS interest requirements on late payments (4/15/2009 11:11:12 AM)
grins, i have told him that lol. I just thought its ironic and teeter with regard to in this economy them NOT lowering the fines and penalties and interest but also going back and forth with the hey i have paid my taxes on time, why should those who don't get a free ride kind of concept. I think they are wrong to do this in this economy especially with what they are doing with the bailout etc, but also feel millions of people pay their taxes on time knowing they will have a payment or they have a higher withholding so they get a refund. So i also feel they shouldn't change it. angel

CruelNUnsual -> RE: mm IRS interest requirements on late payments (4/15/2009 2:41:56 PM)
quote: ORIGINAL: LaTigresse Yes, they can and do charge an outrageous interest. And fees, and penalties and anything else they can come up with. Uhhh, no. The "outrageous interest" rate is 4% per year, which applies to installment agreements as well as late filing. Try getting a loan at your bank for that. The late filing penalty is .5% per month, far from outrageous (see what you pay if your credit card is late), and totally avoidable.

sophia37 -> RE: mm IRS interest requirements on late payments (4/15/2009 3:14:22 PM)
I dont see the IRS as being benevolent with a 4% fee like the poster above me, but I must be wrong. What they came up for me seemed outrageous. But Ive dealt with them quite a bit these past several years, since Im now in charge of my elderly relatives taxes as well. Whats interesting is that I've actually had them apologize to me. So I dont know. It's better to not deal with them at all. But if you have to, like a credit card company, pay it off as quick as possible! Seriously.

camille65 -> RE: mm IRS interest requirements on late payments (4/15/2009 3:46:49 PM)
As I was filing my extension this morning (thank you LadyHibiscus and peon for your help) I was wondering something. With all of the economic turmoil going on right now, is there going to be an increase of people trying to 'cheat' the IRS? Of course there is no way for me to find out, but I did wonder. About 10 years ago the beloved IRS declared that I owed because of a Roth IRA. Um. A tax free IRA. That I personally never contributed to. It took me over 2 years of fighting before I gave up and wrote a check for 5K. The rep admitted to me on the phone that it was tax free and I shouldn't be paying but that I owed anyway. [&:] I owe again this year and I haven't been employed since the first month of 2005. The IRS really ticks me off. I think I need to go make a happy rum thingie to help bring my blood pressure down..

servantforuse -> RE: mm IRS interest requirements on late payments (4/15/2009 7:51:17 PM)
Have him apply for stimulus money like every one else in the country is doing. They have 2 trillion to give away and you don't have to pay it back.

DesFIP -> RE: mm IRS interest requirements on late payments (4/15/2009 8:46:42 PM)
Next year, have him pay estimated quarterlies. Easiest way to avoid this in the future.

snappykappy -> RE: mm IRS interest requirements on late payments (4/15/2009 8:50:48 PM)
when i used to work i did not ever take any deductions and got a refund back of course lots of people criticized me for that they said the irs does not pay interest for the money that i overpaid into but at least i knew that i did not have to write them a check

samboct -> RE: mm IRS interest requirements on late payments (4/16/2009 8:12:13 AM)
Camille I suspect whoever sold you a Roth IRA as tax free misrepresented it to you. The Roth IRA is paid for out of post tax income- but all the proceeds are not taxable. A conventional IRA is paid for by pre-tax income and is not taxed currently, but the proceeds are taxable. So its really pay your taxes sooner, or pay them later. If you've got lots of money in retirement, tax free money is really nice. If you're on limited funds in retirement- the tax rate then may be lower than you pay now. The traditional warnings about the IRS seem to work. Don't ignore them- they really hate that and the type of people that work there can be petty and vindictive when crossed. However, if you actually get them on the phone (which can be an ordeal)- a plea for help will often be met with a human response. Sam

Raiikun -> RE: mm IRS interest requirements on late payments (4/16/2009 5:10:15 PM)
quote: ORIGINAL: CruelNUnsual Uhhh, no. The "outrageous interest" rate is 4% per year, which applies to installment agreements as well as late filing. Try getting a loan at your bank for that. Tangent...but we just refinanced our home at 3.75% fixed, no closing costs. ;)

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