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IRS Offers Options to Help Taxpayers Who Can't Pay

FS-2018-8, April 2018

The Internal Revenue Service reminds taxpayers who can’t pay the full amount of federal taxes they owe that they should file their tax return on time and pay as much as possible. This will help reduce penalties and interest. If they can’t pay it all, they have some other options.

Options for Paying Now

The IRS offers several convenient ways for taxpayers to pay their taxes.

IRS Direct Pay, a free and secure way for individual taxpayers to pay tax bills and make estimated tax payments directly from their bank accounts. The IRS will give taxpayers instant confirmation when they submit their payment.

Electronic Federal Tax Payment System (EFTPS) is for individual and business taxpayers to pay federal taxes electronically online or by phone for free. To enroll or for more information, taxpayers should visit EFTPS.gov or call 800-555-4477.

Taxpayers who use Direct Pay and EFTPS can sign up to get email notifications about their electronic payments. Once taxpayers sign up, they’ll receive email messages that show payments that are scheduled, cancelled, returned and modified. They’ll also receive reminders for scheduled payments and confirmation of an address change.

For Direct Pay, taxpayers need to sign up for email updates each time they make a payment. For EFTPS, taxpayers need only sign up for email once to receive the messages each time they pay. Taxpayers can cancel at any time.

The IRS continues to remind taxpayers to watch out for email schemes. Taxpayers will only receive an email from Direct Pay or EFTPS if they’ve requested the email service.

Electronic Funds Withdrawal is an integrated e-file/e-pay option offered only when taxpayers e-file their federal taxes using tax preparation software or through a tax professional. Taxpayers can submit one or more direct debit payment requests from their designated bank account.

Same-Day Wire Transfer. Taxpayers may be able to do a same-day wire transfer from their financial institution. They should contact their financial Institution for availability, cost and cut-off times.

Debit or Credit Card. Taxpayers can pay online, by phone or mobile device if they e-file, paper file or are responding to a bill or notice. It's safe and secure. The IRS uses standard service providers and business/commercial card networks. Payment processors use taxpayer information solely to process taxpayers’ payments. The payment processor will charge a processing fee.

IRS2Go Mobile App. Taxpayers can get easy access to mobile-friendly payment options including IRS Direct Pay, a free and secure way to pay directly from their bank account, or by debit or credit card using an approved payment processor for a fee. Taxpayers can download IRS2Go from Google Play, the Apple App Store or Amazon for free.

Cash at a Retail Partner. For taxpayers who prefer to pay their taxes in cash, the IRS offers a way for them to pay at a participating retail store. It generally takes five to seven business days to process these payments, so taxpayers should plan to make sure their payments post on time. Publication 5250 contains printable instructions and taxpayers can also go to IRS.gov/paywithcash for instructions and more information.

Check or Money Order. Taxpayers can send a check or money order with their tax return or when they get a bill. Before submitting a payment through the mail, taxpayers should consider one of the quick and easy electronic payment options.

Options for Taxpayers Who Can’t Pay Now

The IRS offers payment alternatives if taxpayers can’t pay what they owe in full. A short-term payment plan may be an option. Taxpayers can ask for a short-term payment plan for up to 120 days. A user fee doesn’t apply to short-term payment plans.

Taxpayers can also ask for a longer term monthly payment plan or installment agreement. A $149 user fee applies to monthly payment plans or installment agreements that can be reduced to $31 if payments are made by direct debit.

Individual taxpayers who owe more than $50,000 and businesses that owe more than $25,000 must submit a financial statement with their request for a payment plan.

Another option may be an Offer in Compromise. An Offer in Compromise is an agreement between the taxpayer and the IRS to settle their tax debt for less than the full amount they owe. Not everyone qualifies for an offer. Taxpayers should use the Offer in Compromise Pre-Qualifier to decide if an offer in compromise is right for them.

Depending on the circumstances, a taxpayer may consider borrowing the tax amount due. The costs of getting a loan or even paying by credit card may be less than the penalties and interest accrued.

If taxpayers can’t find an option that works for them, the IRS may offer other alternatives, such as a temporary suspension of collection. Taxpayers should contact the IRS at 800-829-1040 or call the phone number on their bill or notice to discuss other options.

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