The IRS offers different tax payment options you can pursue if you have tax debt or you completed your tax return and you realize you cannot pay. You should always pay the IRS or your State as much as you can and be sure to FILE your taxes because failing to file penalties are more severe that failing to pay. There are no payment options if you fail to file.
If you can pay Federal taxes over time and you need longer than 120 days some type of Installment Agreement may be a good fit for you. Each differs slightly by the term of the period, amount owed to the IRS, and the paperwork required. With state tax debt, payment plans can also be pursued. See if you qualify for an Installment agreement because if you don’t there are other options. However, realize that Interest and penalties are reduced but are still effective with an Installment Agreement. Remember that as long as you have a balance due with the IRS, penalties and interest will continue to accrue.
If you have just finished your tax return and realize you cannot pay then you can typically buy yourself a good 90 days in making full payments before any formal letters will be sent to you. Payments should reflect what you can pay. In other words, if you file and include partial payment, the IRS will send you a letter 45 days later letting you know the balance of your taxes owed tacked on with interest and a late penalty. They will repeat this process until they send you formal notice they will institute the collection process. This option is good if you can pay off your taxes in the next 90 to 180 days with payments so often and it is not an official payment option of the IRS. You can also request a six month extension by proving financial hardship but additional paperwork is required – its official but difficult to obtain.
The professionals here at Patriot Tax Pros can guide you through the payment plan request process to help you obtain a reasonable payment plan that fits within your budget. This can include a Partial Payment Installment Agreement (PPIA) request or Installment Agreement. Don’t worry, if none of these are suitable for you, there are other options including but not limited to proving uncollectible status or submitting an Offer In Compromise (OIC). Payment plan extension requests are also served by our team of tax attorneys, CPAs, and former IRS agents.