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IRS interest on installment payments reaches nearly 9%

Taxpayers who were unable to pay the IRS for last year’s income because the deadline to do so passed this Saturday now have 15 days to ask the IRS to pay off the balance in installments if they can’t make the payment early. However, they will have to count on an interest rate hike of nearly 9%.

The late payment interest charged by the state is the highest in a decade and reflects the increase in the 12-month Euribor rate. Calculations by the state bank Caixa Geral de Depósitos show that a debt of €1,000 could be paid in four instalments, which would equate to a monthly surcharge of €22.19, with a monthly payment of €272.19. This is because taxpayers will have to count on a higher rate of 8.876% when they are notified of the instalments requested from the tax authorities.

The number and cost of the installments depend on the amount of the debt and vary from a maximum of 12 installments if the debt is equal to or less than five thousand euros, and up to 36 months. If the amount is equal to or less than five thousand euros, the tax authorities waive the guarantee and automatically approve the payment by installments. In these cases, the number of installments can reach a maximum of 12, for debts from 1701 euros to five thousand euros. For higher values, where there is no waiver of the guarantee and where the number of payments can reach 36 months, “it is necessary to offer a mortgage or an independent guarantee, namely a bank guarantee or a security deposit, together with the request.”

Taxpayers must receive a payment document for each contribution on the Financial Portal from the 11th day of each month.

Failure to pay any of the payments implies “an immediate date for the payment of the next payments and the initiation of enforcement proceedings to collect the amount of the debt,” the Tax Authority warns.

Author: Raquel Oliveira
Source: CM Jornal

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