tax payment

Tax bill too big to pay all at once? Sign up for an IRS payment plan

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate


Do you owe the IRS money this year? You have several options for paying your tax online. But if you can’t pay it all at once, the IRS gives you payment plan choices.

Note, however, that your first step must be to file your tax return on time. Failure to do so can result in stiff penalties.

Paying with plastic

Some taxpayers find the easiest way to pay is with a credit card. The IRS has awarded contracts to three companies to accept payments by plastic: Official Payments, Link2Gov and WorldPay. They take American Express, Discover, MasterCard, Visa or a variety of debit cards.

Each company has its own fee schedule that will add to your bill.


If you do pay a fee, make a note of it for next year’s filing. The IRS has ruled that this amount is deductible as a miscellaneous itemized expense.

Keep in mind that if you don’t pay off your credit card in full, you’ll start racking up interest charges on your account. In some cases, though, your credit card interest charges might fall below IRS penalties and interest you’d owe if you don’t pay on time.

A low-interest credit card may be a good option in this scenario.

Installment plans

If your tax bill is too large for a credit card, the IRS will take monthly payments.

Approval is not automatic unless:

  • You owe less than $10,000.
  • You have paid taxes in a timely way during the past five years without entering into an installment agreement.
  • You can pay the full amount within three years.

To get the program going, you can attach Form 9465, Installment Agreement Request, to the front of your tax return. Or, you can request an installment agreement online at the IRS website if the total amount you owe is not more than $50,000.

Taxpayers who seek an installment plan must provide detailed financial information, including data on equity assets, that the IRS will verify.

Keep in mind that paying over time, even to Uncle Sam, will cost you more.

  • Expect to pay a one-time user fee of $225, up from $120 last year.
  • The fee drops to $107 for direct-debit agreements.
  • Some lower-income taxpayers could pay a reduced fee of $43.
  • Applying online is your best bet: You pay a $149 one-time fee, or only $31 if you agree to a direct-debit plan.

You’ll be billed for any fee when the agency sends you a notice detailing your payment terms. Plus, penalties and interest continue to accrue to your unpaid tax bill. The IRS may also file a federal tax lien against you, which will be released when you pay off your installment loan.

Another way to deal with a large tax bill is with a home equity loan. That way you won’t have to pay IRS penalties and fees.

Offer in compromise

What if you can’t pay off your tax bill, in whole or part, in three years or five years or even longer? Then it might be time to negotiate.

The IRS might be willing to accept a lump-sum payment offer of less than your total tax bill if it is realistic. In these cases, the agency hopes to get some taxpayer money sooner than it would after years of costly collection efforts.

The IRS will review your financial situation and future income potential to determine whether your offer is appropriate. Be warned, however: This program was designed only for extreme cases, and few filers will qualify for the program. If you believe your situation does indeed meet the requirements, you need to file two forms: Form 656, Offer in Compromise, and Form 433-A, Collection Information Statement.

To find out whether you qualify for an offer in compromise before filling out the paperwork, use the IRS’ online pre-qualifier tool. The questionnaire format will let you know if you’re eligible, as well as help determine an acceptable preliminary offer amount.

Options for offers in compromise include:

  • Lump sum cash offer — This must be paid in five or fewer installments within five months after the offer is accepted. You must include 20 percent of the offer amount plus a $186 application fee.
  • Periodic payment offer — This is paid in six or more monthly installments within 24 months after the offer is accepted. You must produce the first proposed installment payment plus $186.

The $186 fee is waived for qualifying low-income taxpayers.

The IRS has created a special website with “what if” scenarios regarding tax and payment issues for taxpayers who are having a hard time making their payments.

Regardless of which payment plan method you choose, make your decision now. Delay will only compound your financial and tax problems since penalties and interest charges will continue to accrue. By sending in any amount when you file your return, at least you’ll ultimately reduce your interest and penalty charges.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

Pay taxes in cash at 7-Eleven stores

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate


The Internal Revenue Service now is accepting cash from taxpayers who don’t have bank accounts or who prefer to pay their bills, tax and otherwise, that way.

Uncle Sam’s tax collector has partnered with ACI Worldwide’s Official Payments and PayNearMe to make cash tax payment available at more than 7,000 7-Eleven stores across the country.

“Taxpayers have many options to pay their tax bills by direct debit, a check or a credit card, but this provides a new way for people who can only pay their taxes in cash,” said IRS Commissioner John Koskinen in announcing the new service.

But, this being taxes and the IRS, the cash option isn’t as simple as showing up at your neighborhood convenience store and handing over your tax payment.

Here’s a primer on using the cash tax payment option.

Pay, but not quickly, with cash

Start at the IRS payments web page. Click the tab at the top of, “Payments,” to take you there.

Once at the payments page, click the “cash” link (under “Other ways you can pay”). Under the first step, click the link that takes you to Official Payments, with which the IRS has worked since 1999 to accept debit and credit card tax payments.

At the Official Payments website, start the payment process. No, it doesn’t say “pay with cash” yet. You’ll get there after you select the type of tax payment (annual 1040, estimated tax, etc.) you want to make.

After clicking on “Start,” the next web page offers you the “Cash at 7-Eleven” payment option. When you click “continue,” it will take you through the process, which ultimately will result in you getting an email from Official Payments that validates your information.

After the IRS also confirms your data, you’ll then get another email, this time from PayNearMe. This is the company that actually accepts your cash at a 7-Eleven and delivers it to the U.S. Treasury.

In that email you’ll find a link that will provide you with your PayNearMe code. You can print it or have it sent to your smartphone.

Now you’re ready to head, code in hand or on phone, to a participating convenience store. You can find one of the IRS-approved 7-Eleven payment locations by going again to the IRS cash payment page.

The convenience store clerk will give you a receipt for your payment, which should post to the taxpayer’s IRS account within 2 business days.

A few more cash payment details

As you can see from the process, it’s not a one-day task, so plan accordingly. If you wait until April 18 to pay, you won’t make the deadline and will be hit with late-payment penalties.

Similarly, the payment code is not good forever. It will expire 7 days after it is emailed to you.

Find your 7-Eleven early. Not every store is participating. And in some states, you can’t use this cash payment option at all. Official Payments notes in the fine print when you choose the cash option that, “There are no participating locations in the following states at this time: AL, AK, AR, GA, HI, LA, MN, MS, MT, NE, NM, ND, OK, SD, TN, WY.”

The maximum cash payment you can make is $1,000 per day.

And whatever cash amount you pay, it will cost you a few dollars more. A $3.99 service fee will be added automatically when you set up your cash payment at Official Payments.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.


Where are your tax dollars spent?

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!


Tax Day is done, for most of us anyway. Uncle Sam thanks you. He now has a fresh influx of cash to keep his businesses running.

But just what is he doing with our tax payments? The White House has an answer.

The Obama administration has an online calculator on, where you can enter in your income tax amount and see which federal operations get your money, and how much.

I plugged in $25,000 to get an idea of how taxes are distributed.


Almost $6,873 of that payment is going toward health care. That’s 27.49 percent of the tax payment.

This isn’t the Affordable Care Act, otherwise known as Obamacare. According to the White House, the health care budget segment of the calculator covers spending on Medicare Supplementary Medical Insurance and the prescription drug benefit, as well as Medicaid, the Children’s Health Insurance Program, food safety, disease control and other health care activities.

Our payroll taxes for Medicare also are excluded from this spending segment. Your annual Medicare and Social Security taxes are added separately to the calculator’s receipt of your tax dollars.

And military and veterans health care programs are accounted for under national defense and veterans benefits, respectively.

Defense dollars

Speaking of national defense, it’s the second most expensive line item in the taxpayer calculator.

Almost 24 percent of our tax dollars go toward spending on military personnel, operations, procurement and other national defense activities. For the $25,000 tax bill in our example, that’s around $5,978.

The only other sector that takes up a double-digit percentage of our taxes is job and family security. A little more than 18 percent of our taxes falls into this category, which includes unemployment insurance, food assistance and certain tax credits, such as the Earned Income Tax Credit, and other programs designed for income security. Of the $25,000 in taxes, $4,542.50 goes to this category.

Interest, etc.

What about the federal debt’s interest? That was a huge political rallying cry a few election cycles ago.

The White House calculator says 9.07 percent of our dollars go toward the accruing interest on the national debt. For this example’s purposes, that comes to almost $2,268.

The remaining areas where our taxes are spent, and the tax dollar percentages that go toward them, are: veterans benefits at 5.93 percent; education and job training at 3.59 percent; immigration, law enforcement and administration of justice at 2 percent; international affairs at 1.85 percent; natural resources, energy and environment at 1.64 percent; science, space and technology programs at 1.13 percent; agriculture at 0.97 percent; community, area and regional development at 0.43 percent; federal response to natural disasters at 0.39 percent; and the always fun catchall of additional government programs at 3.42 percent.

Uncle Sam’s balance sheet

Are you surprised by just where your tax dollars are being spent? More importantly, are you happy or upset about the distribution of the dollars?

Personally, I’d like to take some of the national defense dollars and send them to scientific endeavors, especially space programs. I mean, really, how stupid is it that we have to hitch rocket rides to the International Space Station from Russia?

If you’re not pleased with your taxpayer receipt, take it up with your members of Congress.

To see where your dollars could go in 2015, see Bankrate’s interactive story “What if you spent like the government?” It’s based on the White House’s 2015 budget proposal.

And if you got an extension to file your 2014 taxes, be sure to check the taxpayer receipt calculator when you’re done and see where your tax dollars will go.

Herman and Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Greenwich CT and beyond.

Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.