If you’re not able to pay the tax you owe by your original filing due date, the balance is subject to interest and a monthly late payment penalty. There’s also a penalty for failure to file a tax return, so you should file timely even if you can’t pay your balance in full. It’s always in your best interest to pay in full as soon as you can to minimize the additional charges.
Paying electronically is a convenient way to pay your federal taxes online, by phone for EFTPS or card payments, or from a mobile device. Electronic payment options are available on our payments page and the IRS2Go app. When paying electronically, you can schedule your payment in advance. You’ll receive instant confirmation after you submit your payment. With Direct Pay and EFTPS, you can opt-in to receive email notifications about your payments. The IRS uses the latest encryption technology making electronic payments safe and secure. It’s quick, easy, and much faster than mailing in a check or money order.
IRS Direct Pay is a secure service you can use to pay your taxes for Form 1040 series, estimated taxes or other associated forms directly from your checking or savings account at no cost to you. Complete the five easy steps and you’ll receive instant confirmation after you submit your payment. With Direct Pay, you can use the “Look Up a Payment” feature to view your payment details and status. You can opt-in to receive email notifications about your payment. You can also modify or cancel your payment up to two business days before your scheduled payment date.
You can access your federal tax account information through a secure login at irs.gov/account. You can view the amount you owe along with details of your balance, view your payment history, access Get Transcript to download or print your tax records and view key information from your current year tax return as originally filed. In addition, you can pay using your bank account or a debit or credit card or apply for an online payment agreement if you need more time to pay.
If you decide to pay by mail, enclose a check or money order with a copy of your tax return or notice. Make it payable to the United States Treasury and provide your name, address, daytime phone number, taxpayer identification number, tax year, and form or notice number (e.g., 2018 Form 1040) on the front of your payment.
If you can’t pay in full, you should pay as much as possible to reduce the accrual of interest on your account. Please refer to Topic No. 158 for the information needed to ensure proper credit for your payment. You should consider financing the full payment of your tax liability through loans, such as a home equity loan from a financial institution or a credit card. The interest rate and any applicable fees charged by a bank or credit card company may be lower than the combination of interest and penalties set by the Internal Revenue Code.
Full Payment Agreements (up to 120 days)
If you can’t pay in full immediately, you may qualify for additional time –up to 120 days– to pay in full. There’s no fee for this full payment; however, interest and any applicable penalties continue to accrue until your liability is paid in full.
If you’re not able to pay your balance in full immediately or within 120 days, you may qualify for a monthly payment plan (including an installment agreement). To request a payment plan, use the OPA application or complete Form 9465, Installment Agreement Request and mail it to us. A payment plan allows you to make a series of monthly payments over time. The IRS offers various options for making monthly payments:
- Direct debit from your bank account,
- Payroll deduction from your employer,
- Payment by Electronic Federal Tax Payment System (EFTPS),
- Payment by credit card via phone or Internet,
- Payment via check or money order, or
- Payment with cash at a retail partner.
The IRS charges a user fee when you enter into a payment plan; however, if you are a low-income taxpayer, this user fee is reduced and possibly waived or reimbursed when certain conditions apply.
- If you haven’t filed your return yet, you may submit Form 9465 or attach a written request for a payment plan with the monthly payment amount and due date to the front of your return.
- If you have filed your tax return and can’t pay in full, you may request a payment plan (including an installment agreement) for your current tax liabilities using the OPA application. Even if the IRS hasn’t yet issued you a bill, you may establish a pre-assessed agreement by entering the balance you’ll owe from your tax return or notice of deficiency when prompted by OPA.
- If you can’t provide full payment after receiving a bill from the IRS, you may request a payment plan (including an installment agreement) using the OPA application. You also may submit Form 9465 or attach a written request for a payment plan to the front of your bill.
- You may also request a payment plan by calling the toll-free number on your bill, or if you don’t have a bill, call us at 800-829-1040 (individuals) or 800-829-4933 (businesses).
Before your payment plan request can be considered, you must be current on all filing and payment requirements. Taxpayers in an open bankruptcy proceeding aren’t generally eligible. You must specify the amount you can pay and the day of the month. You should base your monthly installment payment amount on your ability to pay and it should be an amount you can pay each month to avoid defaulting. Your payment date can be any day from the first to the 28th. The IRS expects to receive your payment ON the date you indicate, so be sure to figure mailing time (10 days) into the date you select. Usually within 30 days, the IRS will respond to your request to advise you if it has approved it, denied it, or needs more information.
Installment agreements by direct debit and payroll deduction enable you to make timely payments automatically and reduce the possibility of default. These convenient payment methods also allow you to avoid the time and expense of mailing monthly payments.
For a direct debit installment agreement, you must provide your checking account number, your bank routing number, and written authorization to initiate the automated withdrawal of the payment. Apply by using the OPA application, contacting us by phone or in person (by appointment only), or mailing us Form 9465 with your checking account number and bank routing number.
For a payroll deduction installment agreement, submit Form 2159, Payroll Deduction Agreement. Your employer must complete Form 2159, as it’s an agreement between you, your employer, and the IRS. In some situations, the IRS may set up a regular installment agreement for you and convert it to a payroll deduction agreement upon receipt of the completed Form 2159 from your employer.
Offer in Compromise
If you can’t fully pay under an installment agreement, you may propose a partial payment installment agreement or an offer in compromise (OIC). An OIC is an agreement between you and the IRS that resolves your tax liability by payment of an agreed upon reduced amount. Before the IRS will consider an offer, you must have filed all tax returns, made all required estimated tax payments for the current year, and made all required federal tax deposits for the current quarter if the taxpayer is a business owner with employees. Taxpayers in an open bankruptcy proceeding aren’t eligible to enter into an OIC. To confirm eligibility and ensure the use of the current application forms, use the Offer in Compromise Pre-Qualifier tool.
Temporarily Delay Collection
If you can’t pay any of the amount due because payment would prevent you from meeting your basic living expenses, you can request that the IRS delay collection until you’re able to pay. If the IRS determines that you can’t pay any of your tax debt because of financial hardship, the IRS may temporarily delay collection by reporting your account as currently not collectible until your financial condition improves. Being currently not collectible doesn’t mean the debt goes away. It means the IRS has determined you can’t afford to pay the debt at this time. Penalties and interest continue to accrue until you’ve paid off the debt in full. We may ask you to complete a Collection Information Statement and provide proof of your financial status (including information about your assets and your monthly income and expenses) before approving your request to delay collection. The IRS may temporarily suspend certain collection actions, such as issuing a levy until your financial condition improves. However, we may still file a Notice of Federal Tax Lien while your account is suspended.
Responding to Your IRS Notice
It’s important to respond to an IRS notice. If you don’t pay your tax liability in full or make an alternative payment arrangement, the IRS has the right to take collection action.
You have rights and protections throughout the collection process. If you would like information about payment arrangements, installment agreements, and what happens when you take no action to pay, refer to Publication 594, The IRS Collection Process.
For more information about making payments, payment plans (including installment agreements), and offers in compromise, select Pay on the IRS home page.
Source: IRS: www.irs.gov