Options When You Can't Pay Taxes When They Are Due

Can't Pay Taxes Whe Due Sometimes you don't have enough money to pay when tax time rolls around. Regardless if you have the money or not, your taxes are still due and you need to file at the very least. If you do not file or pay, you risk the IRS issuing Tax Levies, Liens, and Seizures against you.

The first good thing to know is that you can buy more time. If you know that you will not have enough money to pay before Tax Time, you can file an extension with IRS Form 4868 "Application for Automatic Extension of Time To File U.S. Individual Income Tax Return." This will prevent the 5% per month late filing fee you'll receive if you decide to put off filing simply because you cannot pay.

But if it's already too late and you filed late, your tax debt is growing as we speak and at and alarming rate. You need to get the facts and find a solution to handle your debt fast.


Options If You Cannot Pay Anything To the IRS

  • Currently Not Collectible/Hardship:
  • If you can prove to the IRS that you cannot pay your IRS debt and have no assets, you may qualify for this program. When your account is in Hardship Status, collections activities will be suspended temporarily. You have to file IRS Form 433A and detail your entire financial situation. You'll also need to gather plenty of documentation to prove your point.

  • Suspended Collections:
  • With Suspended Collections, the collections activity on your debt may be suspended until the Statute of Limitations on your account runs out (typically 10 years). Taxpayers that usually qualify for Suspended Collections are those who earn disability or social security as their sole income.

If you have disposable income, you will not qualify to have collections activities suspended. But there are still options available for those with low incomes.

Options If You Cannot Pay the Full Tax Now, But You Can Over Time

  • Installment Agreement:
  • You can pay your IRS tax debt monthly, much like you pay on monthly credit card debt, but with some big differences. First of all, the IRS Installment Agreement is a binding contract and you cannot default on a payment. And second, the IRS will choose the amount you pay monthly based on your calculated disposable income.

  • Offer in Compromise:
  • You can settle your IRS tax debt. However, this is an extremely difficult process. You have to go through 45 pages of paperwork and submit plenty of documents to prove as to why you need your IRS Debt Settled. Also, your chances of having an Offer in Compromise approved are greatly reduced if you do not have a professional submit your Offer for you.

    Partial Payment Installment Agreement

    This is similar to a regular installment agreement, except you end up paying less than the total amount you owed because debt falls off (statute of collections) during the course of this payment plan.

Working with the IRS is difficult but possible. However, our complicated tax code warrants professional help in many cases. It's a good idea to have a professional negotiate with the IRS on your behalf when you can't pay back taxes. If you are not sure, start with the risk free consultation link at the top.


Unpaid Taxes Help and Related Articles


File Back Taxes
Benefits of using a tax professional to help when you cannot afford to pay taxes owed

Using a Tax Professional to Help with Tax You Cannot Pay
Benefits of using a tax professional to help when you cannot afford to pay taxes owed

Cannot Pay Back Taxes
What to do and what to expect with unpaid IRS back taxes.

Delay IRS Collections
How to temporarily delay the IRS collections and avoid additional penalties and interest from adding up.

Prove Financial Hardship
Prove to the IRS that you do not have the means to pay your back taxes with your current financial standing. Hold of IRS until you can pay or until statute of limitations expires.

List of Ways To Settle Back Taxes
There are many ways you can settle IRS back taxes. The IRS has created settlement methods or ways to reduce taxes for all different types of financial situations.