If you owe federal taxes, ignoring the bill makes penalties and interest worse. The IRS offers several ways to resolve tax debt.
Options
- Short-term payment plan, giving extra time to pay in full.
- Installment agreement for monthly payments over a longer time.
- Offer in compromise to settle for less if you qualify based on income, expenses and assets.
- Currently not collectible status in cases of hardship.
- Penalty relief in some situations.
Steps
- File all required returns. Filing even if you cannot pay avoids extra penalties.
- Check your balance through your IRS online account.
- Apply for a payment plan online or by phone.
- Pay on time under the plan.
- Contact the IRS if circumstances change.
Avoid scams
Be careful with companies that promise to settle tax debt for pennies on the dollar, since they often charge high fees for little benefit. You can usually contact the IRS directly for free.
Get help
Tax professionals such as enrolled agents, CPAs and tax attorneys can help with complex problems. Low-income taxpayer clinics offer free or low-cost help for eligible people.
Frequently asked questions
Can the IRS take my wages?
Yes, through a levy after notices, though you have rights to appeal.
Do state taxes work the same way?
States have their own rules and programs.