Taxpayers unable to pay all taxes due on the bill are encouraged to pay as much as possible. By paying as much as possible now, the amount of penalties and interest owed will be lessened. They should then immediately call the number or write to the address on the bill they receive, or visit the nearest IRS office to explain their situation.
Based on the circumstances, a taxpayer could qualify for an agreement to full pay within 60 or 120 days. The IRS is willing to offer these short term agreements to full pay in order to assist in tax debt repayment. A taxpayer can request an agreement length depending on the specific situation. Penalties and interest incurred will be less through an agreement to full pay within 60 or 120 days rather than seeking to enter into an installment agreement.
If a taxpayer cannot make payment in full upon receipt of the bill, the IRS may request a Collection Information Statement (CIS) to compare individual or business monthly income with expenses and to assist in determining a payment plan.
More ways taxpayers can resolve their debt include:
- Monthly payments through an Installment Agreement,
- Temporary delay or significant hardship consideration, or
- Offer in Compromise
Also consider the following:
- Cash advances on credit cards
- Bank loans
- Liquidating savings accounts, savings bonds, stocks, etc.
- Borrowing against 401(k), life insurance, etc.
- Using equity in real estate or other assets