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Frequent Contributor
MarcinXP
Posts: 307
Registered: ‎09-06-2011
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Re: IRS installment loan affect credit score

I have to disagree and the experience I've had was nothing short of wonderful...They worked with me even when I defaulted many times and never got IRS TAX LIEN..although I defaulted and ignored their letters...I've never ignored FINAL NOTICE OF INTENT TO LEVY letter that they send certified..that just seemed to scary...Tax Lien, Levy wages, bank account...etc...

 

I defaulted few times and they always worked with me even when I thought they would not...I had a $500 installment..defaulted...they helped me out and set me up for $225 a month...had few job issues and now I'm on $150 a month for 12 months and $240 after that...I also disagree with saying that they have crazy interest rates or anything like that...their interest rate is WAY better than any loan or credit card I have seen...just to give you a detailed history

 

I owed $6,400+ for 2007 and $7,000 for 2008. I have paid $914.92 in interest in last 5 years for 2007 amount and $748.35 for 2008 amount...I'm almost done with the 2007 pay off and I haven't touched 2008 yet...with my refund going directly to 2007 amount owed..I should be done with 2007 installment in few months and I can start paying back 2008 installment...just to give you a perspective on the interest.

 

 

 

February Statement shows         Year 2008      Taxes you owe $7,006.18      Interest Charges   $748.08

March Statement shows              Year 2008      Taxes you owe $7,006.18      Interest Charges   $768.08

 

So they roughly charge me about $20 a month in interest. The only reason that taxes amount has not changes is because I still owe about $1200 from 2007 taxes so once I pay that I will start paying 2008 year..which makes sense...

 

BUT....in last 4 years the interest is about 10% total of amount tax I owe...in fact $20 a month in interest charges on a $7,000 amount I owe is about 2% APR which is lower than any credit card company or bank I know. On the amount of $13,000 that I owed in last 4-5 years so far I paid $1650 in Interest...over 4 years or about 400 a year...that is I think really great...that is about $30 bucks a month which if you have a credit card at 12% APR you would pay that $30 on the amount of $3,000.

 

I believe IRS can only charge UP TO 25% in interest on a total anyway as is stated on the installment agreement..so If I owe $7,006.18 the max they can charge in interest is around $1750...but as you can see in the last 4 years they charged me only $768.08...with the fact that I will start paying on this end of this year and also that I've changed my withholdings and get about $2,500 in refund a year in last 2 years I should be done with this in less than 24+ months which means that my interest will probably be less than a $1000 anyway so thats about $240 more dollars over next 2 years..

 

YMMV but to me IRS has been great..it's my fault in the first place for going exempt for work bonuses thinking that I can just pay later and being irresponsible...I've learned my lesson and won't be doing this again...in-fact anytime I get a bonus now I leave my witholdings at 0 and let them take max just so I can get a decent refund and put it towards my taxes....I'm looking forward to the day that I finish this.

 

Pode - seems like you had a different experience so sorry it did now work out for you

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