If you owe money to the Internal Revenue Service or your state Department of Revenue, that liability does not go away easily. If you do not make proper arrangements to pay the liability, government agencies have very powerful tools to get your attention.
Here is a short summary of some of the options available if you owe money to the Federal or State governments:
Six Tips to Help You Pay Your Tax Bill this Summer
If you get a tax bill from the IRS, don’t ignore it. The longer you wait the more interest and penalties you will have to pay. Here are six tips to help you pay your tax debt and avoid extra charges:
1. Reply promptly. After tax season, the IRS typically sends out millions of notices. Read it carefully and follow the instructions. If you owe, the notice will tell you how much and give you a due date. You should respond to the notice promptly and pay the bill to avoid additional interest and penalties.
2. Pay online. Using an IRS electronic payment method to pay your tax is quick, accurate and safe. You also get a record of your payment. Options for electronic payments include:
Direct Pay and EFTPS are free services. If you pay by credit or debit card, the payment processing company will charge a fee.
3. Apply online to make payments. If you are not able to pay your tax in full, you may apply for an installment agreement. Most people and some small businesses can apply using the Online Payment Agreement Application on IRS.gov. If you are not able to apply online, or you prefer to do so in writing, use Form 9465, Installment Agreement Request to apply. The best way to get the form is on IRS.gov/forms. You can download and print it at any time.
4. Check out a direct debit plan. A direct debit installment agreement is the lower-cost hassle-free way to pay. The set-up fee is less than half of the fee for other plans. The direct debit fee is $52 instead of the regular fee of $120. With a direct debit plan, you pay automatically from your bank account on a day you set each month. There is no need for you to write a check and make a trip to the post office. There are no reminder notices from the IRS and no missed payments. For more see the Payment Plans, Installment Agreements page on IRS.gov.
5. Pay by check or money order. Make your check or money order payable to the U.S. Treasury. Be sure to include:
- Your name, address and daytime phone number
- Your Social Security number or employer ID number for business taxes
- The tax period and related tax form, such as “2014 Form 1040”
Mail it to the address listed on your notice. Do not send cash in the mail.
6. Consider an Offer in Compromise. With an Offer in Compromise, or OIC, you may be able to settle your tax debt with the IRS for less than the full amount you owe. An OIC may be an option if you are not able to pay your tax in full. It may also apply if full payment will create a financial hardship. Not everyone qualifies, so you should explore all other ways to pay before submitting an OIC. To see if you may qualify and what a reasonable offer might be, use the IRS Offer in Compromise Pre-Qualifier tool.
Find out more about the IRS collection process on IRS.gov.
IRS YouTube Video:
- Online Payment Agreement – English | Spanish | ASL
- IRS Tax Payment Options – English | Spanish | ASL