Question:   Can I make installment payments on the amount I owe?

Answer:   Answer: Yes. If you cannot pay the full amount due as shown on your return, you can ask to make monthly installment payments.  If your request to pay in installments is granted, the following conditions apply:

• You will be charged a one time user fee of $105.00.  For direct debit agreements, the fee will be $52.00.
• Interest is charged on any tax not paid by its due date, until the account is fully paid.
• You will be charged a late payment penalty unless you can show reasonable cause for not paying the tax by the due date (April 16, 2012) for individual income tax returns.  The penalty will be charged until it reaches 25% of the original balance due.
• Before requesting an installment agreement, you should consider less costly alternatives such as a bank loan.

To request an installment agreement send Form 9465 (PDF), Installment Agreement Request, with your return.  To request a payroll deduction installment agreement, use Form 2159, Payroll Deduction Agreement.

To request a direct debit installment agreement, use Form 433-D, Installment Agreement.

Advantages of a direct debit installment agreement to the taxpayer include:

• Reduced user fee
• No check to be mailed
• Postage savings
• No check processing charges
• No problem remembering to make the monthly payment

You should receive a response within 30 days if you submit the form with your return.  For more details on installment payments, refer to the references below or call the IRS toll-free at 800-829-1040.