Summary#
This bill removes the IRS installment-agreement fee for individuals whose adjusted gross income (AGI) in the most recent year does not exceed 250% of the applicable poverty level (as set by the Secretary). The change applies to installment agreements entered into more than 12 months after the law is enacted. The bill aims to reduce a financial barrier for lower-income taxpayers who use IRS payment plans.
- Main change: No fee for setting up an IRS installment agreement for taxpayers with AGI ≤ 250% of the applicable poverty level.
- Who sets the poverty level: The Secretary (the Treasury Secretary) will determine the applicable poverty level.
- Timing: The waiver applies to installment agreements started 12 months after the law is enacted.
- Scope: The rule uses adjusted gross income from the most recent year for which that information is available.
What it means for you#
- Low- and moderate-income taxpayers: If your most recent-year AGI is at or below 250% of the poverty level, you would not pay the installment-agreement setup fee when you make a new payment plan with the IRS after the 12-month delay.
- Taxpayers with higher income: If your AGI is above that threshold, the bill does not change the fee rules; you would still pay any existing fee.
- Self-employed or sole proprietors: The bill uses AGI, so people who file individual returns (including many self-employed people) are covered if their AGI meets the threshold.
- People who already paid fees: The bill is silent about refunds or relief for people who paid fees before the effective date. It only applies to agreements entered into after the 12-month period.
- IRS users generally: Fewer low-income filers may have to delay setting up payment plans because of the fee, which could change how many people use installment agreements.
- Tax administration: The IRS must apply the income test using the most recent year for which AGI is available and follow the Secretary’s rule for the poverty level.
Expenses#
No publicly available information.
- The bill does not include a fiscal note in the supplied material.
- This could reduce fee revenue collected by the IRS from qualifying taxpayers.
- There could be modest administrative costs for the IRS to identify eligible taxpayers, update systems, and apply the income test.
- It is unclear how large the revenue loss or administrative costs would be because the bill does not provide numbers or an official estimate.
Proponents' View#
- The bill appears intended to reduce the financial burden on lower-income taxpayers who need to pay taxes over time.
- Supporters may argue this removes a barrier to compliance by making it easier for low-income people to enter payment plans.
- The 250% of poverty cutoff targets relief toward people with limited ability to pay, rather than all taxpayers.
- The 12-month delay gives the IRS time to update systems and rules before the change starts.
Opponents' View#
- One concern is the loss of fee revenue the IRS currently collects from installment agreements for qualifying taxpayers.
- The bill does not explain how the IRS will verify eligibility or handle cases where someone’s income changed since the most recent return.
- It is unclear whether people who paid fees before the law takes effect or before they could qualify would get refunds or other relief.
- The phrase “applicable poverty level (as determined by the Secretary)” leaves unclear which official poverty measure will be used and how often it will be updated.
- There may be administrative costs to implement income checks and update systems, but the bill provides no details on funding or staffing for that work.