All taxpayers should file on time, even if they cannot pay what is owed. This saves them from a potential failure to file penalty which can become significant over time, up to 60%! This plus the failure to pay penalty and the numbers can really add up. Filing an extension is only an extension to file the form, not pay the tax. So what do you do if you cannot pay the taxes due? Here are some tips:
- File on time and pay as much as possible. This can mitigate any penalties and interest and if you can pay the bill off within a short period of time, may be the best option.
- Get a loan or pay the taxes off with a credit card. The interest and fees charges by a bank or credit card will be much less than IRS interest and penalties.
- Use the online payment agreement tool. On the IRS website, you can apply for an installment agreement and have the amount directly debited from your account, thus avoiding sending a monthly check
- Contact the IRS directly for a payment agreement. If the amount is significant a phone conversation with the IRS may be necessary to set up a payment agreement.
The IRS reminds everyone to never ignore a tax bill. Even if you think the bill may have crossed with the payment, it is a good idea to double check the amounts. The IRs and any taxing authority carries the force of law behind them. This means they have the power to levy assets, wages and do all sorts of things in response to an ignored tax bill.
Feel free to give us a call if you need assistance in this are.
Tags: IRS payment
Written by: Doug Rodrigues