While the majority of Americans get a tax refund from the Internal Revenue
Service each year, there are many taxpayers who owe and some who can’t pay the
tax all at once. The IRS has a number of ways for people to pay
their tax bill.
The IRS has announced an effort to help struggling taxpayers get a fresh
start with their tax liabilities. The goal of this effort is to help
individuals and small business meet their tax obligations, without adding
unnecessary burden. Specifically, the IRS has announced new policies and
programs to help taxpayers pay back taxes and avoid tax liens.
Here are ten tips for taxpayers who owe money to the IRS.
- Tax bill payments If you get a bill this
summer for late taxes, you are expected to promptly pay the tax owed
including any penalties and interest. If you are unable to pay the
amount due, it is often in your best interest to get a loan to pay the
bill in full rather than to make installment payments to the IRS. - Additional time to pay Based on your
circumstances, you may be granted a short additional time to pay your tax
in full. A brief additional amount of time to pay can be requested through
the Online Payment Agreement application at www.irs.gov
or by calling 800-829-1040. - Credit card payments You can pay your bill
with a credit card. The interest rate on a credit card may be lower than
the combination of interest and penalties imposed by the Internal Revenue
Code. To pay by credit card contact one of the following processing
companies: Link2Gov at 888-PAY-1040 (or www.pay1040.com),
RBS WorldPay, Inc. at 888-9PAY-TAX (or www.payUSAtax.com),
or Official Payments Corporation at 888-UPAY-TAX (or www.officialpayments.com/fed). - Electronic Funds
Transfer
You can pay the balance by electronic funds transfer, check, money order,
cashier’s check or cash. To pay using electronic funds transfer, use
the Electronic Federal Tax Payment System by either calling 800-555-4477
or using the online access at www.eftps.gov. - Installment Agreement You may request an
installment agreement if you cannot pay the liability in full. This is an
agreement between you and the IRS to pay the amount due in monthly
installment payments. You must first file all required returns and be
current with estimated tax payments. - Online Payment Agreement
If
you owe $25,000 or less in combined tax, penalties and interest, you can
request an installment agreement using the Online Payment Agreement
application at www.irs.gov. - Form 9465 You can complete and
mail an IRS Form 9465, Installment Agreement Request, along with your bill
in the envelope you received from the IRS. The IRS will inform you
(usually within 30 days) whether your request is approved, denied, or if
additional information is needed. - Collection Information
Statement
You may still qualify for an installment agreement if you owe more than
$25,000, but you are required to complete a Form 433F, Collection
Information Statement, before the IRS will consider an installment
agreement. - User fees If an installment
agreement is approved, a one-time user fee will be charged. The user
fee for a new agreement is $105 or $52 for agreements where payments are
deducted directly from your bank account. For eligible individuals
with lower incomes, the fee can be reduced to $43. - Check withholding Taxpayers who have a
balance due may want to consider changing their W-4, Employee’s
Withholding Allowance Certificate, with their employer. A withholding
calculator at www.irs.gov can help
taxpayers determine the amount that should be withheld.