Introduction
Tax Day—April 15—arrives every year whether you’re ready or not. For many taxpayers, the biggest stress isn’t filing the return, it’s realizing they can’t pay the full balance due. If you’re in this situation, you’re not alone. Millions of Americans owe the IRS each year, and the agency has programs designed to help. The key is knowing your options and acting quickly to avoid unnecessary IRS penalties and interest.
Why Filing Still Matters Even If You Can’t Pay
One of the most common mistakes taxpayers make is failing to file because they can’t pay. This only makes things worse.
- Failure-to-File Penalty: 5% of the unpaid tax per month, up to 25%.
- Failure-to-Pay Penalty: 0.5% of the unpaid tax per month, up to 25%.
- Interest: Compounds daily on top of penalties.
Filing on time—even without payment—avoids the larger penalty and keeps your options open.
Short-Term IRS Payment Options
If you can pay within a few months, the IRS offers short-term solutions:
- Short-Term Payment Plan (up to 180 days): No setup fee, but penalties and interest continue until the balance is paid.
- Credit or Loan Options: Sometimes, a personal loan or credit line costs less in interest than IRS penalties.
Long-Term IRS Payment Options
If you need more time, the IRS provides structured programs:
1. Installment Agreement (IRS Payment Plan)
- Pay your balance in monthly installments.
- Available if you owe less than $50,000 (individuals) or $25,000 (businesses).
- Payments are automatically withdrawn to avoid default.
2. Offer in Compromise (OIC)
- Settle your tax debt for less than the full amount owed.
- Strict eligibility requirements—you must prove you cannot pay in full.
- The IRS reviews income, expenses, and assets before approval.
3. Currently Not Collectible (CNC) Status
- If paying would cause financial hardship, the IRS may temporarily pause collection.
- Interest and penalties continue to accrue, but the IRS won’t levy wages or bank accounts while you’re in CNC.
Other Relief Options
- Penalty Abatement: If you have a good compliance history, you may qualify for first-time penalty relief.
- Extension to File (Not to Pay): Filing an extension gives you until October 15 to file your return, but payment is still due April 15.
Why Professional Help Matters
The IRS has multiple programs, but choosing the wrong one—or applying incorrectly—can cost you time and money. A tax attorney can:
- Evaluate which program best fits your situation.
- Negotiate directly with the IRS on your behalf.
- Protect you from aggressive collection actions like IRS wage garnishment or bank levies.
- Help you avoid future tax problems through proactive planning.
Conclusion
If you can’t pay your taxes by April 15, don’t panic—and don’t ignore the problem. Filing on time and exploring IRS payment plans, Offers in Compromise, or hardship status can help you regain control. The sooner you act, the more options you’ll have.
Contact our office today for a confidential consultation. We’ll help you choose the best IRS tax relief option and protect your financial future.
Disclaimer:
This post does not constitute legal advice and does not create an attorney-client relationship, it is merely a general discussion of points of the law and may not be complete or up to date. Please contact our office for a consultation to discuss how tax laws may be relevant to your specific situation.