Interest rate for IRS payment plan? Anyone know current rates...

Wait, so even with a payment plan you're still getting hit with the failure-to-pay penalty? That doesn't seem fair if you're actively paying it off according to an agreement. And is the interest really compounded daily? That seems excessive.

The failure-to-pay penalty is reduced by half (from 0.5% to 0.25% per month) when you have an approved payment plan, so there is definitely a benefit to setting one up. And yes, the interest is compounded daily, but remember that's on an 8% annual rate, so it works out to about 0.022% daily. While it might seem high, it's actually lower than many credit card interest rates, which can be 15-25% or higher. If you have access to lower interest options (like a personal loan from family with no interest), that might be financially better, but the IRS payment plan is designed to be accessible to everyone.

Did it actually help you get through to the IRS faster? I've been on hold for literally hours trying to set up my plan, and I'm about to give up.

I'm curious - does this tool show you if you qualify for any penalty reductions? I heard somewhere that the IRS has "first-time abatement" for penalties if you haven't had issues before.

It didn't directly connect me to the IRS, but it simplified everything so I could use the online payment agreement tool instead of calling. The whole process took me like 15 minutes instead of hours on hold. Yes, it actually did flag that I was eligible for first-time penalty abatement! I had no idea that was even a thing until the system pointed it out. It saved me about $400 in penalties since I had a clean compliance history for the previous three years.

How does this even work? The IRS phone system is literal hell - there's no way to "skip the line" without some insider connection, right?

Sounds too good to be true. I've been calling for THREE WEEKS and can't get through. If this actually worked, wouldn't everyone be using it? I'm skeptical this isn't just another scam targeting people who are already in tax trouble.

It uses their call technology to navigate the IRS phone tree and wait on hold for you. When they finally reach a human agent, you get a call back to connect directly with the agent. No insider connection needed - it's just automating the painful waiting part. Look, I was skeptical too. But I was desperate after trying for days to get through. It's not some magical solution - it's just a service that waits on hold so you don't have to. Saved me literally hours of my life and the stress of wondering if I'd get disconnected after waiting forever.

Interesting idea! Do you know if there are specific credit cards that work better for this? I'd definitely consider this option if I could get approved for a decent limit.

Most major banks offer 0% intro APR cards if you have decent credit. Chase Freedom, Citi Simplicity, and Discover It all worked for me in the past. The key is making sure the 0% period is long enough for you to pay it off completely, and calculating whether the processing fee (usually 1.87-1.98% when paying taxes with credit card) is worth it compared to the IRS interest and penalties. For your $7,800 bill, you'd pay about $150 in processing fees, but then have no interest for 12-18 months depending on the card. Just be absolutely sure you can pay it off before the 0% period ends, because those interest rates will jump to 18-29% afterward.

Does anyone know if setting up a payment plan affects your credit score? I'm already dealing with some credit issues and don't want to make things worse.