I am unable to pay my delinquent taxes. Will the IRS accept an Offer in Compromise?
You may qualify for an Offer in Compromise if you are unable to pay your taxes in full or if you are facing severe or unusual economic hardship. Refer to Tax Topic 204, Offers in Compromise, for additional information.
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Is there any special assistance available on unresolved tax matters which are creating a hardship?
If you are suffering, or about to suffer a significant hardship because of the way Internal Revenue laws are being carried out, you may ask for special help from the IRS' Taxpayer Advocate Program (formerly Problem Resolution Office). You may reach that office by dialing 1-877-777-4778 (1-877-PRP-IRSU).
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- Tax Topic 104, Taxpayer Advocate Service - help for problem situations
I owe money this year. Who do I make the check out to?
If you pay by check or money order, make it out to the "United States Treasury." Please show your correct name, address, social security number, daytime telephone number, and the tax year and form number on the front of your check or money order. Double check to make sure that you have printed your social security number correctly and that it matches the one used on your income tax return.
Enclose your payment with your return, but do not attach it to the form. If you received Form 1040-V, Payment Voucher, use it to send your payment to the IRS. This will help us process your payment more accurately and efficiently. Follow the instructions that come with the form.
To pay by credit card (American Express® Card, MasterCard®, or Discover® Card), call 1-888-2PAY-TAX (1-888-272-9829) and follow the instructions. A convenience fee will be charged by the credit card processor based on the amount you are paying. You will be told what the fee is when you call and you will have the option to continue or cancel the call. Do not include the convenience fee as part of your tax payment. You can also find out what the fee will be on the Internet at Official Payments Corp. If you paid by credit card, enter the confirmation number you were given at the end of the call on page 1 of Form 1040 in the upper left corner.
Can I ask to make installment payments on the amount I owe?
Yes. If you cannot pay the full amount due as shown on your return, you may ask to make monthly installment payments. However, you will be charged interest and you may be charged a late payment penalty unless you can show reasonable cause for not paying on the tax not paid by April 15, even if your request to pay in installments is granted. Before requesting an installment agreement, you should consider less costly alternatives such as a bank loan.
To request an installment agreement, use Form 9465, Installment Agreement Request. You should receive a response within 30 days. For more details on installment payments, refer to Tax Topic 202, What to do if You Can't Pay Your Tax, or Publication 594, Understanding the Collection Process.
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I just completed my return and find that I owe the IRS money. What should I do?
You should file your return even if you can't pay all of the amount you owe. File by the due date of the tax return and pay as much as possible. By filing on time, you avoid the late filing penalty. By paying as much of the amount you owe as possible, you reduce the amount of interest and late payment penalty that you will owe. For more details on interest and penalties, refer to Tax Topic 201, The Collection Process, or Publication 594, Understanding the Collection Process.
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What kind of penalties and interest will I be charged for paying and filing my taxes late?
Interest, compounded daily, is charged on any unpaid tax from the due date of the return until the date of payment. The interest rate is the federal short-term rate plus 3 percent. That rate is determined every three months.
For current interest rates, go to News Releases and Fact Sheets and find the most recent Internal Revenue release entitled Quarterly Interest Rates.
In addition, if you filed on time but didn't pay on time, you'll generally have to pay a late payment penalty of one-half of one percent of the tax owed for each month, or part of a month, that the tax remains unpaid after the due date, up to 25 percent. The one-half of one percent rate increases to one percent if the tax remains unpaid after several bills have been sent to you and the IRS issues a notice of intent to levy.
Beginning January 1, 2000, if you filed a timely return and are paying your tax pursuant to an installment agreement, the penalty is one-quarter of one percent for each month, or part of a month, that the installment remains unpaid.
If you did not file on time and owe tax, you may owe an additional penalty for failure to file unless you can show reasonable cause. The combined penalty is 5 percent (4.5% late filing, 0.5% late payment) for each month, or part of a month, that your return was late, up to 25%. The late filing penalty applies to both the tax shown on your return and any additional tax found to be due, as reduced by any credits for withholding and estimated tax and any timely payments made with the return. After five months, if you still have not paid, the 0.5% failure-to-pay penalty continues to run, up to 25%, until the tax is paid. Thus, the total penalty for failure to file and pay can be 47.5% (22.5% late filing, 25% late payment) of the tax owed. Also, if your return was over 60 days late, the minimum failure-to-file penalty is the smaller of $100 or 100% of the tax required to be shown on the return.
Also, refer to Tax Topic 653, IRS Notices and Bills and Penalty and Interest Charges.
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I received an IRS bill for an amended return I filed. I am not able to pay the whole amount at this time. Will the IRS allow me to make monthly payments?
If you cannot pay the full amount due, you may ask to make monthly installment payments. You may be charged a fee for this arrangement. Refer to Tax Topic 202, What to Do if You Can't Pay Your Tax, for more information.
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