If you can't pay immediately or within 180 days, you may be eligible to pay monthly through an installment agreement. The IRS will give taxpayers up to 120 days to pay their full tax balance. If you don't want the IRS to know where you bank, use a money order or cashier's check from another bank. If the IRS approves your long-term online payment plan (installment payment agreement), a setup fee may apply based on your income.
If you already have a payment plan, you may also qualify to use the online payment plan option to review your current agreement. Similarly, if you fail to comply with AI payments and the IRS proposes to cancel it, the collection period is suspended for 30 days. If you don't qualify for an online payment plan, you can also request an installment payment agreement (IA) by submitting Form 9465, Application for Installment Payment Agreement in PDF, to the IRS. Finally, if you have employees, you must be up to date with payroll tax deposits and Form 941 requests to obtain an AI.
Don't panic: you may qualify for a self-service online payment plan (including an installment agreement) that allows you to pay off an outstanding balance over time. Once you complete your online application, you'll receive immediate notification of whether your payment plan has been approved without having to call or write to the IRS. Online payment plans are processed more quickly than applications filed with electronically filed tax returns, even if the new tax has not yet been applied. However, higher credit card balances could negatively affect your credit score, and paying with credit may not be appropriate for people with unmanageable credit card debt.
Learn how to request a payment option from the IRS, such as a payment extension or installment payment agreement, when your company owes taxes and can't pay. Similarly, if you're self-employed, you should be up to date with your quarterly estimated tax payments for the current year. Also, if you don't have any money left over after living expenses, you're not in a position to negotiate a payment plan. The IRS will charge interest at the federal short-term rate plus 3% (interest may change quarterly).
The type of settlement you can get depends on your situation, including how much you owe and how soon you'll be able to pay the balance. Whether you owe back taxes or current taxes, you may be subject to significant penalties and accrued interest over time if you don't pay.
