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How to Pay a Past Due Tax Debt - IRS

Updated: Oct 13

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Did you know that more than two-thirds of tax returns end with the taxpayer getting a refund, but, according to the IRS, many people end up owing money. The IRS won't grant you can’t get a payment extension if you owe a tax debt. If you end up with a tax debt — taxes that weren’t paid on time — due to insufficient tax withholding or another reason, any delay in paying a tax debt will result in late penalties and the IRS could eventually order a tax levy and/or a tax lien on your property.

Steps To Pay Off Back Taxes

Even if you’re late on paying taxes you owe, there’s still hope you can remain in good standing with the IRS if you take the right actions. Follow these instructions for paying off back taxes:

1. Determine how exactly how much you owe. If you filed your income tax return but did not pay what you owe, the IRS should mail you a bill for back taxes. The IRS website also gives an up-to-date payoff amount, including the interest and penalties accrued, and reflects any payments you’ve made in the past 24 months. You can request an account transcript online or by mail.

2. Make a tax payment to the IRS. If you received a bill from the IRS, follow the instructions on the bill. You can pay by check, money order, cashier’s check, cash or electronic funds transfer for online tax payments. Payment by credit card or debit card incurs processing fees.

3. Apply for a payment plan. If you cannot pay your balance in full, the IRS offers different payment plan options. IRS Payment Plans:

If you can’t afford to pay your tax liability in full, the IRS offers installment agreements (#IRSinstallmentagreement) that can make the burden of paying a tax bill more manageable. Here are details on IRS payment plans available:

Installment Agreements: You can apply for these monthly payment plans on the IRS website if you owe less than $50,000, or via Form 9465 and Form 433-F. Applying for an installment agreement costs money — from $31 for an agreement of fewer than 120 days or $149 if your agreement is for more than 120 days. You’ll need to apply online and pay by direct deposit. Low-income taxpayers might qualify to have the fee waived.

Offer in Compromise: With an Offer in Compromise, you agree to pay a certain amount and the IRS agrees to accept that amount in full satisfaction of your tax debt. The IRS has been, in the past, very selective about agreeing to OICs — however - due to COVID, we expect the IRS to be overwhelmed with the number of taxpayers that have a tax debt they will be unable to pay. We expect the IRS will be increasing the number of Offer in Compromise approvals. Currently the IRS approves approx. 42% of all Offer in Compromise submissions.



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