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Cannot Pay IRS Tax Bill

If you are one of the many taxpayers who cannot pay the IRS tax bill for the taxes owed, don't panic. A taxpayer who cannot pay his or her tax payment can set up an agreement with the IRS just as he or she can set up an agreement with any creditors. Yes there will be fees and tax penalty, but the IRS fees and IRS penalties are much less than the fees and penalties commercial banks charge their customers. You will not find outrageous interest rates and hefty penalties on your IRS tax bill if you cannot pay the tax payment.

Setting up a payment plan with Uncle Sam

If by the time you file your tax return, you owe the IRS money and you did not send in the full amount of tax payment, then you will get an IRS tax bill detailing how much tax you owe as well as interest and tax penalty. The less you owe, the less interest and penalties so try to pay as much as possible. However, if you really cannot pay your entire IRS tax bill in full, there are payment plans the IRS will work out with you.

I cannot afford to pay my taxes, should I file my tax return anyway?

Definitely! More tax penalties are assessed for failure to file your tax return on time so taxpayers should file their tax returns even if they cannot afford to pay the IRS tax bill yet.

I can only afford to pay part of my tax bill, should I pay that small amount or should I wait to pay the full amount?

Since penalties and fees are assessed monthly, you should pay as much of your IRS tax bill off as possible. Every month that you do not pay your IRS tax bill, you will incur fees, interests and penalties. Make sure you make your tax payments correctly using check or money order made out to the United States Treasury with appropriate personal details on the payments.

If the taxpayer cannot pay his or her tax bill in full immediately, the IRS offers short-term administrative extensions of time to pay in full from 10 to 120 days.

What are the interests and penalties for not paying taxes in full?

When a taxpayer has an outstanding balance of tax owed to the IRS, the balance is subject to interest and monthly late payment penalty.

IRS installment agreement

The IRS' installment agreement allows taxpayers with outstanding tax bills to make series of monthly payments over time. IRS installment agreements can be from:

  • Direct Debit from your bank account,
  • Payroll Deduction from your employer, or
  • Payment via check or money order.

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