The fee is reduced to $43 for individuals with income below a certain amount; the IRS usually provides instructions to individuals on how to apply for the reduced rate. There is a $45 fee for reinstatement of a lapsed agreement. If the failure-to-file penalty is 0.05%, although this amount will decrease on a monthly basis as the principal is repaid. He submits Form 9465 with his return and establishes a 36-month payment plan. If the federal funds rate is 3%, then he will also pay another 6% annually in penalties until the balance is paid off; 12% of $7,000 is $840, the IRS will charge Fred a 6% interest rate on the outstanding balance.