The IRS is actually willing to work with you when you have a tax bill. The key is to be responsive and not ignore the bill. This will help you avoid penalties and other charges. Below are five tips that the IRS recommends.
1. Pay electronically.
Using an IRS electronic payment to pay your tax is quick, accurate and safe. You also get a record of your payment. Your options include:
- IRS Direct Pay
- Electronic Federal Tax Payment System
- Credit or debit card
Direct Pay and EFTPS are free services. If you pay by credit or debit card, the company that processes your payment will charge a fee.
2. Pay monthly if you can’t pay in full.
If you can’t pay all at once, apply for a payment plan. Most people and some small businesses can apply using the IRS Online Payment Agreement Application . You can also apply for a plan using Form 9465, Installment Agreement Request.
3. Check out a direct debit pay plan.
A direct debit pay plan is the lower-cost hassle-free way to pay. The set-up fee is less than other plans – $52 instead of $120. With this type of plan, you pay each month automatically from your bank account. There are no reminder notices from IRS, no missed payments and no checks to write and mail.
4. Consider an Offer in Compromise.
An Offer in Compromise allows you to settle your tax debt with the IRS for less than the full amount. An OIC may be an option if you can’t pay your tax in full. It may also apply if full payment will create a financial hardship.
5. Pay by check or money order.
Make your check or money order payable to the U.S. Treasury. Be sure to include:
- Your name, address and daytime phone number
- Your Social Security number or employer ID number if business tax
- The tax period and related tax form, such as “2013 Form 1040”
Mail it to the address listed on your notice. Do not send cash in the mail.
Green Financial Services works with clients year-round on establishing various payment options with the IRS. If you think you qualify or need any of these options, contact us to discuss and avoid penalties.