You have filed your taxes for the year and instead of receiving a refund you owe the IRS tax money but cannot pay it back. This is a very unfortunate situation but one that is not uncommon. Don’t panic the IRS has a couple of different options to assist you in paying your taxes.
1.Request an Extension of Time to Pay
Contact the IRS to request an extension of time to pay the tax. If granted, the IRS will give you 120 days to make a payment with no additional fees, however, interests and penalties will apply to the full amount of the tax liability until it is paid in full. This is the quickest and least costly option the IRS will provide. You can also file for an extension through FORM 1127 but your taxes must be filed on time.
2. Request an Installment Agreement
Another option offered to you by the IRS to assist your in paying back your taxes is through an installment agreement. This give you the ability to pay the debt back over 6 years, which gives you a lot more time than an extension of time to pay. FORM 9465 needs to be submitted when you file your taxes to request the installment agreement. You should receive a response within 30 days of filing your application. You can make payments by:
- Direct debit from a bank account
- Payroll deduction from your employer
- Via check or money order
- Through the Electronic Federal Tax Payment System
- Via Credit card by phone or internet
- Via Online Payment Agreement
The fees associated with the Installment agreement are: A one time installment fee of $225 or $31 if debited from your bank account. To restructure or reinstate an existing installment agreement, the fee is $89. You are able to set the amount, dates, and frequency of the payment but we advise you to plan accordingly so you will not default on the agreement.
3. Offer in Compromise
If you are unable to pay your taxes because of losing your job or your business is failing the final option is to request an Offer in Compromise from the IRS. This is only if you will not have the ability to pay the tax liability within the foreseeable future or based on the timelines in the options listed above. The OIC will allow you to pay a reduced amount of what you owe that they agree to as full payment of your tax liability. Qualification for the OIC require you to have all filing and payment requirements current and not participating in any bankruptcy proceedings.
Please contact us today for help with repaying your tax liability at 305-392-0339.