What If I Can’t Pay the Taxes I Owe the IRS in Full?


If you are unable to pay the taxes that you owe the IRS, rest assured that your situation is not hopeless. Because the IRS understands that it is not possible for everyone to pay their tax liability in full, they provide alternate tax settlement solutions depending upon their tax and financial situation.

Method 1: IRS Installment Agreement

The IRS offers installment agreements to allow you to pay off your tax liability over the course of several months if you do not have the cash to do so all at one time. Setting up an installment agreement is easy enough if you begin working with the IRS as soon right away. There are several different types of installment agreements and filing for each is slightly different depending on how much is owed in taxes.

Method 2: Pay Taxes on a Credit Card

The IRS does allow individuals to pay taxes with a credit card. We do not highly advise this method because most credit card companies will charge a larger percentage of interest to carry your debt than if you were to simply set up an installment agreement with the IRS. There are times that the IRS may not accept an installment agreement (like if you have defaulted on them in the past) or maybe you have a great deal on a credit card that doesn’t charge interest for 6-18 months.

Method 3: Offer in Compromise Tax Program

If you cannot afford any type of payment plan with the IRS, have doubt as to liability of the tax, or there is severe doubt the the IRS will ever be able collect the taxes owed, then it may be possible to qualify for this program.

Under and offer in compromise you may be able to settle taxes owed for less than the original amount. Realize that generally the IRS denies 80% of all requests for ths type of settlement. If you are considering this method it is highly advised that you work with an experienced tax professional because the filing is quite difficult to understand.

Method 4: Prove Financial Hardship Get Declared Uncollectible by the IRS

If you can prove to the IRS that the collection of the taxes owed would cause significant financial hardship they may put a hold on your account. This does not mean that you do not owe taxes any longer, only that they will temporarily not take any collection actions against you.

The first step in paying back taxes owed to the IRS is to acknowledge your situation and take steps to resolve it as soon as possible, since you will be charged the failure to pay penalty – in addition to accruing interest and suffering multiple other consequences – if taxes remain unpaid any longer. Consider talking to a tax professional if you are having trouble navigating the IRS system on your own.

FAQ-Related Topics and Help

Back Taxes Frequently Asked Questions
Common Q&A about owing taxes to the IRS. Answers about various types of settlements, tax liens, tax levies and more.

Tax Settlement Methods
Another detailed guide on what your options are if you can’t pay your taxes. Understand what a tax settlement is, how it works and how you can settle your taxes on your own.

Tax Payment Plans
Details on the various options taxpayers have to pay back the IRS if they cannot pay on time.

Tax Settlement Help
Find out how a tax settlement service works. Request help from a qualified tax resolution company to help you find the best settlement for your situation.

Help Setting up a Tax Payment Plan
There are several methods of paying past-due taxes and dissolving your tax liability. Our tax team can help you determine the best approach for you.