IRS thinks you owe them money

IRS Offers Options to Help Taxpayers Who Can’t Pay

Tax Law

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.