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 extension of time to pay. The IRS is willing to offer extensions of time to pay in order to assist in tax debt repayment. A taxpayer can request an extension from 30 - 120 days depending on the specific situation. Penalties and interest incurred will be less through an extension of time to pay 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:
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
See the example on, How Borrowing Money to Pay Your Taxes Could Cost You Less Than an Installment Agreement.
References/Related Topics
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