If you don't have the funds to cover what you owe Uncle Sam, you're not alone. You also have options-many of them set up by the IRS for people who find themselves in such a situation.
If you find that you do not have enough money to pay the IRS, the most important thing to do-regardless of this situation-is to file your tax return on time. At the same time, pay as much of what you owe as possible. If you file late or apply for an extension, you will incur filing and payment penalties.
If you cannot pay cash, the IRS has set up a system to take payments by credit card. But with charging, you will have to pay a 2.5 percent convenience fee to the intermediary company as well as the interest charges on your credit card.
If cash and credit are a problem, request that the IRS allow you to pay your taxes on an installment basis. You can file Form 9465-Installment Agreement Request-if all your required returns have been filed.
Payments can be made monthly by an automatic withdrawal from your checking account. You will be charged a $43 fee plus interest and a late payment penalty while making payments.
If you cannot pay your taxes with cash, credit or an installment agreement, you may be able to participate in the IRS' Offers in Compromise program. With this program, the IRS may accept a lesser amount due, if it involves severe economic hardship or extraordinary circumstances and if resolution of the matter would promote effective tax administration. These rules were not made so taxpayers can avoid paying tax but were made to enable the IRS to help taxpayers in trouble.
Enrolled Agents are federally licensed to represent taxpayers before the IRS for audits, collections, and appeals. To find an Enrolled Agent, call toll free 1-800-429-4334 or visit the National Association of Enrolled Agents Web site at www.naea.org.
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