IRS Income Tax Payment Plans
Even if you do not have the money to pay the taxes you owe now, you should file a tax return on time or as soon as possible, or at least file a tax extension by Tax Day.
Important: The IRS Tax Penalties For Not Filing A Tax Return Are Higher Than the Penalties for Not Paying Taxes: Estimate Your Potential Tax Penalties. Most taxpayers do not know this.
Start and File your 2019 Tax Return first. Once your return is accepted by the IRS, and you don't have the funds to pay your taxes now, you should look at the tax payment plans listed below. These plans enable you to work with the IRS to pay your tax debt over time rather than all at once. Click for back taxes or previous tax year return forms.
When it comes to paying IRS and or State Taxes there are essentially three scenarios:
1. Ready to Pay Now. A taxpayer has the funds required or is ok with paying taxes by credit card now.
2. Not Ready to Pay Now but Over Time: A taxpayer does not have the funds now to pay taxes on time, but does want to pay over time. On this page, you will find payment plan options for this scenario.
3. Not to Pay Now or Over Time. Or, does not Want to Pay Taxes for any reason: A taxpayer who does not have the funds now and/or does have the funds, but does not want to pay taxes now nor over time via a payment plan. In this case, the IRS might have already or might will issue a tax levy or wage garnishment against tax debt.
Your individual IRS income tax situation and future income prospects will determine which of the below tax payment plans are available to you. Important: If you have not filed your current year tax return or back taxes, do this as soon as possible as the late filing penalties and interest fees are generally higher than the late payment penalties and interest fees. Use the eFile.com PENALTYucator for more tax penalty details.
If you cannot pay all your taxes on time or in 120 days or less, you may apply for a short-term payment extension with the IRS via an Online Payment Agreement or OPA.
Whether you will qualify to apply online will depend on: 1. A Long-term payment plan or installment agreement) 2. If you owe $50,000 or less in combined taxes, penalties, and interest, and filed all required returns. 3. Short-term payment plan: You owe less than $100,000 in combined taxes, penalties and interest. Keep in mind that setup fees for a plan might be higher if you apply for a tax payment plan by phone at 1-800-829-1040, via mail, or in-person.
We recommend you apply online because you will receive immediate notification of whether your payment plan has been approved or not by the IRS. If the IRS approves your payment plan, one of the following fees will be added to your tax bill. If approved, the fees are listed here
in the what does it cost section. If approved, you can use the Online Payment Agreement tool or your IRS account to make the following changes
: Change monthly payment amount, change monthly payment due date, convert existing agreement to a Direct Debit agreement, and reinstate after default.
Should you not be able to pay your income taxes in full immediately or within 120 days, you may qualify for a monthly plan, including the long-term installment plan. You would pay taxes owed in more than 120 days, with monthly payments. Use the Online Payment Agreement site
to apply online if you have filed your return already for an installment plan or if you apply by phone 1-800-829-1040 or mail complete (if you have not filed a return yet) Form 9465
. For a long-time payment plan, the online setup fee is $149. The phone, mail, or in-person setup fee is $225. Low income taxpayers pay less in setup fees. See if you qualify for a fee reduction by applying for the low-income certificate via the form-13844.
Accrued penalties and interest payments apply until the tax balance is paid in full.
Once you start the application process, you will see more detailed information about both plans: Full Payment and Installment Agreements. Obviously, your personal tax and future income situation will play an important role in deciding which plan to select. Each of these payment plans will offer these options: Direct debit or EFTPS from your bank account, Payroll deduction from your employer - submit Form 2159, Payroll Deduction Agreement
. You should be current on all filing requirements before you select a payment plan. See more information and requirements on Installments Plans
If for some reason you can't pay your taxes via the two plans mentioned above, you may propose a partial payment installment agreement or PPIA. The PPIA is between you the taxpayer and the IRS providing for less than the full payment of the tax liability by the expiration of the collection period. Read your rights as a taxpayer
before you call 1-800-829-1040.
For recommendations see below.
The OIC agreement between you, the taxpayer, and the IRS that resolves your tax liability by payment of an agreed upon reduced amount. You have these options with an OIC. 1. Lump Sum Payment:
The full debt must be paid in 5 or fewer installments. 2. Short-Term Periodic Payment:
The debt must be paid within 24 months. 3. Deferred Periodic Payment:
The debt may be paid in more than 24 months, but must be paid within the 10-year statutory period which the IRS has to collect the debt. Re-requisite is for you to have filed all tax returns. Taxpayers in an open bankruptcy proceeding aren't eligible to enter into an OIC. Use this Pre-Qualifier online OIC tool
to verify if you might be eligible for the Offer in Compromise Agreement. See Offer in Compromise requirements
here. Use Form 656 Booklet and Form 433-A, Form 656
for a step by step guide to apply for the OIC agreement: Form 433-A and all required documentation as specified on the forms and Form 656(s). The non-refundable application fee is $205 and initial non-refundable payment Form 656, unless you qualify for the low-income - via the Form form-13844 -
certification or submit a Doubt as to Liability offer.
If you are unable to pay any tax amount due as it would prevent you from paying for your basic living expenses, you can request a delay of tax collection until you're able to pay. If the IRS agrees with your request that you can't pay any of your tax debt because of financial hardship, the IRS may temporarily delay tax payment collection by reporting your IRS tax account as currently not collectible until your financial condition improves in the future. If approved, it does not mean your tax debt will be canceled or go away. Late tax payment penalties and interest would continue to accrue until you have paid your tax debt in full. The IRS will most likely ask you to submit a Collection Information Sheet via Form 433f, 433a and/or 433b.
The IRS might still file a Notice of Federal Tax Lien.
Do not ignore any notice from the IRS. Either seek professional advice before you respond, but respond in due time. If you don't have the funds to pay your tax liability in full or make an alternative payment arrangement as outline above, the IRS might take tax collection action. Have all your financial information available (e.g. pay stubs, lease or rental agreements, mortgage statements, car lease/loan, utilities, etc.). Read your rights as a taxpayer
before you call 1-800-829-1040.
General Payment Plan Consideration
File your Tax Return even if you cannot pay your taxes on time, as the late filing penalties and interest fees are in most cases higher than the late tax payment interest and penalty fees.
Use the eFile.com PENALTYucator
for more tax penalty details. Last but not least, do not ignore overdue tax payments and tackle the task to work out a payment plan before you might face a wage garnishment or levy and/or a tax lien.
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