When tax time comes around, inevitably there are people who are not able to pay everything they owe.<\/p>\n
Although the IRS always prefers that you find a way to pay your taxes in full, circumstances can sometimes prevent that from happening. If you find yourself in this predicament, the IRS does have options available to help you resolve your\u00a0tax debt<\/a>.<\/p>\n Obviously, the best solution for past due taxes is to pay the entire debt as quickly as possible. Remember that\u00a0penalties and interest will continue to accrue until your balance is fully paid<\/em><\/strong>\u00a0\u2013 the IRS does not necessarily waive these late fees, even if you set up an approved payment arrangement.<\/p>\n In some cases, it is actually more affordable to pay your tax debt using a personal loan or credit card(s), which often charge lower fees than the IRS.<\/p>\n >>\u00a0Owe the IRS? Get a Free Tax Relief Consultation<\/a><\/strong><\/p>\n Your specific tax situation will determine which IRS payment options are available to you.<\/p>\n Here are the payment options if you cannot pay your taxes on time:<\/p>\n There are a few options for individual payment plans \u2013 including full payment, a short-term payment plan\u00a0(paying in 120 days or less), or a long-term payment plan (a.k.a. installment agreement) (paying in more than 120 days).<\/p>\n Taxpayers with past due taxes can request to establish a payment agreement with the IRS. Individuals who owe $50,000 or less (and businesses that owe $25,000 or less) can apply for an\u00a0Online Payment Agreement<\/a>\u00a0on the IRS website. If your tax debt exceeds that threshold, you must file\u00a0Form 9465 (Installment Agreement Request)<\/a>\u00a0along with a Collection Information Statement (Form 433-A, Form 433-B, or Form 433-F).<\/p>\n You may qualify to apply for a payment agreement online if:<\/p>\n NOTE: If you are a sole proprietor or independent contractor, you should apply for a payment plan as an individual (instead of as a business).<\/p>\n Keep in mind, setup fees for IRS payment agreements may be higher if you apply for a payment plan by phone, mail, or in-person (instead of online).<\/p>\n You may be eligible for a short-term agreement if you owe the IRS less than $100,000. This option gives you 120 days to pay in full, with no setup fees involved. You can call the IRS at 1-800-829-1040 or\u00a0apply online<\/a>\u00a0to establish your request.<\/p>\n With an installment agreement, you gradually pay off your tax liability by making monthly payments over a period of time (up to 72 months). You can pay by check, money order, credit card, direct debit, or payroll deduction. After you make each payment, you will receive an\u00a0IRS notice<\/a>\u00a0that shows your remaining balance and the details for your next payment. The setup fee for a long-term installment agreement is $149 (or $31 if you choose to pay monthly through automatic withdrawals via Direct Debit).<\/p>\n For more information about IRS payment agreements, see the\u00a0Instructions for Form 9465 (Installment Agreement Request)<\/a>.<\/p>\n An\u00a0offer in compromise (OIC)<\/a>\u00a0allows you to settle your IRS tax debt for less than the full amount owed. With an OIC, you offer to pay a portion of your taxes right away and the IRS agrees to drop the remaining balance. This payment option comes with a number of strict eligibility requirements, as well as a $186 non-refundable application fee.<\/p>\n When considering your offer, the IRS looks at your income, expenses, asset equity, and ability to pay. Your OIC will be rejected if you are able to pay your full tax debt through a short-term extension or long-term installment plan. The IRS recommends that you \u201cexplore all other payment options before submitting an offer in compromise.\u201d For more information, see the\u00a0IRS Form 656 Booklet (Offer in Compromise)<\/a>.<\/p>\n If the IRS determines that you are unable to pay any of your tax debt, your account may be reported as \u201ccurrently not collectible.\u201d This means that the IRS will temporarily delay collection until your financial situation improves. However, this does not reduce the amount you owe \u2013 it just indicates that the IRS has decided you cannot afford to pay at this time. In fact, your tax debt will continue to increase because the IRS charges\u00a0penalties and interest\u00a0until your balance is fully paid.<\/p>\n You can request a temporary delay of collection by contacting the IRS at 1-800-829-1040 or by calling the phone number shown on your tax notice\/bill. Before your request can be approved, you may need to submit a Collection Information Statement (Form 433-A, Form 433-B, or Form 433-F) and provide proof of your financial status (e.g., your income, assets, and expenses). Keep in mind that the IRS may file a\u00a0\u2018Notice of Federal Tax Lien\u2019<\/a>\u00a0during a temporary delay period in order to protect its interest in your assets.<\/p>\n As part of the IRS Fresh Start initiative, certain eligible individuals may request an extension of time to pay\u00a0and\u00a0have their late payment penalties waived. This option is reserved for taxpayers who would experience \u201cundue hardship\u201d if forced to pay their taxes by the due date. It can apply to the tax shown on your return or a tax deficiency, which is the amount owed after your return is reviewed by the IRS.<\/p>\n According to the IRS, \u201cthe term \u2018undue hardship\u2019 means more than an inconvenience.\u201d You must give proof that you will suffer a significant financial loss if you pay your tax on the due date. For example, if you would need to sell property at a loss in order to pay your taxes, that could be considered \u201cundue hardship.\u201d Whatever your reason is for the extension, you must provide the IRS with a detailed explanation.<\/p>\n To make a request, file\u00a0Form 1127 (Application for Extension of Time for Payment of Tax Due to Undue Hardship)<\/a>. If your extension is approved, it can give you up to 6 more months to pay the tax shown on your return, or up to 18 months to pay a tax deficiency.<\/p>\n NOTE: You must file all required tax returns before you can apply for any payment agreement with the IRS.<\/em><\/strong><\/p>\n If you have any questions about your particular tax situation, talk to a\u00a0qualified tax professional<\/a>\u00a0or contact the IRS directly. For more information on this topic, visit our\u00a0Tax Debt Relief<\/strong><\/a>\u00a0page.<\/p>\n RELATED ARTICLES:<\/strong><\/p>\n How to Resolve Your Federal Tax Debt When tax time comes around, inevitably there are people who are not able to pay everything they owe. Although the IRS always prefers that you find a way to pay your taxes in full, circumstances can sometimes prevent that from happening. If you find yourself in this predicament, […]<\/p>\n","protected":false},"author":1,"featured_media":410,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[13,30,36,37,31,46,39],"tags":[],"class_list":["post-409","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tax-resources","category-federal-tax-returns","category-past-tax-returns","category-paying-taxes","category-tax-deductions","category-tax-relief","category-tax-strategies"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.irs.com\/en\/wp-json\/wp\/v2\/posts\/409","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.irs.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.irs.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.irs.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.irs.com\/en\/wp-json\/wp\/v2\/comments?post=409"}],"version-history":[{"count":8,"href":"https:\/\/www.irs.com\/en\/wp-json\/wp\/v2\/posts\/409\/revisions"}],"predecessor-version":[{"id":10683,"href":"https:\/\/www.irs.com\/en\/wp-json\/wp\/v2\/posts\/409\/revisions\/10683"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.irs.com\/en\/wp-json\/wp\/v2\/media\/410"}],"wp:attachment":[{"href":"https:\/\/www.irs.com\/en\/wp-json\/wp\/v2\/media?parent=409"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.irs.com\/en\/wp-json\/wp\/v2\/categories?post=409"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.irs.com\/en\/wp-json\/wp\/v2\/tags?post=409"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Apply for a Payment Agreement<\/h3>\n
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Short-Term Payment Extension<\/h4>\n
Long-Term Installment Agreement<\/h4>\n
Submit an \u2018Offer in Compromise\u2019<\/h3>\n
Request a Temporary Delay of the IRS Collection Process<\/h3>\n
Request an Extension of Time to Pay (Undue Hardship)<\/h3>\n
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