IRS Tax Relief Options: What To Do If You Can’t Pay Your Taxes

With the April 15th tax filing deadline already passed, what can you do if you’re one of thousands of taxpayers who just don’t have the cash to pay Uncle Sam?

The good news is, there are still IRS tax relief options for you if you did not pay two weeks ago. According to a MarketWatch article, your best bet is to still file your tax return even if you don’t have the money to pay up front. The IRS will not “forget about you” simply if you do not file this year. In fact, you’re looking at more severe IRS penalties if you ignore the IRS than if you faced them proactively.

I want to share some IRS tax relief options from the MarketWatch article if you’re short on cash:

File for a payment extension. If you just need a few more months to get your cash together, you can apply for a payment extension of up to 120 days. Simply use the “online payment agreement” on the IRS Web site at IRS.gov. You can also call the IRS at 1-800-829-1040. While there’s no fee for this option, keep in mind that you will incur interest and the failure-to-pay penalty until you pay off the amount owed.
File for an Installment Agreement. For taxpayers who will not be able to pay their taxes in full for a longer time than 120 days, you can look into the IRS installment agreement option if you owe $25,000 or less. This is a great way to pay off your taxes without emptying your bank account all at once.
Utilize your home-equity line of credit. According to MarketWatch, “Homeowners can tap an existing home-equity line of credit or apply for a new one. Interest rates for people with top credit scores are in the 5% to 6% range right now. And interest payments are deductible in most situations (although not if you’re paying the alternative minimum tax).”
Ask for a loan from family or friends. Getting a loan from family or friends could save you from serious IRS trouble. Make sure to make the loan official by writing out and signing a formal agreement that outlines the amount loaned, interest owed, and payment schedule. If your relative or friend is unable to collect the money back from you, they can deduct the loss on their tax return.
Pay with your credit card. Although more expensive, you can option to pay your tax bill with your credit card. Expect to be charged a “convenience” fee of 2% to 4% of the tax bill, or a flat fee, depending on the IRS payment provider. Additionally, you will have to pay the credit card’s interest rate if you don’t pay off the balance right away.
Look into applying for an Offer in Compromise. For those taxpayers who qualify for this option, an Offer in Compromise is a great way for taxpayers to settle their IRS back taxes for less than what they actually owe. Since the IRS has a notoriously high rejection rate for Offer in Compromise applications, I urge you to consult with a tax attorney or Certified Tax Resolution Specialist before you invest time and money in this option.
Give the IRS a call. According to MarketWatch, “Phone calls to the IRS from perplexed taxpayers with balances due are up 34% through March 6, compared with the same time period last year, according to a report.” This means if you have questions about filing your taxes this year, you’re not alone. However, I caution you against relying on the IRS hotline to solve all your IRS problems. Read this article about what you need to know about reaching out to the IRS for tax help.

Some taxpayers may be surprised to find that instead of getting a tax refund this year, they actually owe Uncle Sam money. According to a report by TIGTA, this is because many taxpayers received more money from the Making Work Pay tax credit than they were supposed to. (Read the TIGTA report here). If you can’t pay taxes or end up stuck with unexpected tax bill of $15,000 or more, you will need expert tax representation by tax attorney or Certified Tax Resolution Specialist. Tapping into the expertise of a well-qualified tax attorney is a great way to ensure that you are getting the best tax help you need.

Instead of wasting time on IRS tax relief options that you may not qualify for, I urge you to book a consultation with a reputable tax resolution firm to explore your options.

Tax Resolution Services is a team of expert tax attorneys, CPAs, and Certified Tax Resolution Specialists who are here to help your IRS tax problems so that you can get the IRS tax relief you need. Give us a call today at 1-866-IRS-PROBLEMS for a free, no-risk tax resolution consultation or visit www.taxresolution.com.

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