How setting up an IRS Installment Agreement may reduce related Penalties.

Certain taxpayers who enter into installment agreements on timely filed returns will have the failure to pay penalty reduced from a half to a quarter percent per month for any month in which an installment agreement is in effect as long as the following conditions are met:

1. the installment agreement was entered into on or after January 1, 2000;
   
2. the balances are due from an individual;
   
3. the tax return(s) was timely filed, including extensions; and
   
4. no CP 504, LT 11, or Letter 1058 was sent, increasing the failure to pay penalty from one-half (0.5) to one (1) percent.