Payment Alternatives When You Owe the IRS
If you cannot pay the full amount of taxes you owe, don’t panic. You should file your 2014 tax return on time and pay as much as possible. This will help reduce the penalties and interest. If you can’t pay it all, think about getting a loan to pay your bill. The costs of getting a loan or even paying by credit card may be less than the penalties and interest charged by the IRS.
The IRS offers several convenient ways to pay your taxes.
IRS Direct Pay is a free and secure way for you to make payments directly from your bank account. If you file electronically you can elect an electronic funds withdrawal from your savings or checking account.
The Electronic Federal Tax Payment System is a system for paying federal taxes electronically using the Internet, or by phone (enrollment is required). Or, you may be able to do a same-day wire transfer from your financial institution.
And you can always send a check or money order with your return or when you get a bill.
What if you can’t pay now?
If you can’t afford to pay what you owe in full, alternatives are available. A payment plan may be an option. You can request a short-term payment plan up to 120-days. There is no user fee for a short-payment plan.
You can also request a longer term monthly payment agreement. A $120 user fee applies to monthly payment plans; the fee is reduced to $52 if you make your payments by direct debit. Individual taxpayers who owe more than $50,000 and businesses that owe more than $25,000 are required to 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 you and the IRS to settle your tax debt for less than the full amount you owe. The offer program provides eligible taxpayers with a path toward paying off their tax debt and getting a “fresh start.” Not everyone will qualify for an offer. Use the IRS’ Offer in Compromise Pre-Qualifier Tool to see if the Offer program is right for you.
More information about your payment options is available at IRS.gov:
- Online Payment Agreement Application
- IRS Form 9465, Installment Agreement Request
- Collection Procedures for Taxpayers Filing and/or Paying Late
- Publication 594, The IRS Collection Process
If you do not find an option that works for you, other alternatives, including a temporary suspension of IRS collection efforts, may be available. Contact the IRS immediately to discuss these other options.