If you can’t pay your taxes on time in the United States, you may file a so-called “installment agreement” with the Internal Revenue Service (IRS).  If the IRS grants the request, the agency will establish a payment plan so that you can make monthly payments on your back taxes. However, before requesting a payment agreement, you should consider finding an alternative source of payment options to pay your tax bill. This will help you avoid the penalties and interest that the IRS charges for back taxes. Depending on the terms you can get from a financial institution or the interest rate on your credit cards, paying your back taxes with your credit card or taking out a loan to cover your debt with the IRS can save you money in the long run. If using a payment agreement to pay what is owed makes the most sense, there are a few things to know before you file your petition, which includes:
  • First, you must have filed all required tax returns. If you didn’t file a tax return when you should have, the IRS won’t make a payment agreement with you.
  • Second, you should examine your financial situation to determine the highest monthly payment you can make. The minimum monthly payment is $ 25, but you should try to pay your back taxes as quickly as possible.
  • Third, keep in mind that the IRS will apply any tax refunds to which you are entitled in the future to cover your tax debt.
You can fill out an application online to access this agreement if your taxes, penalties, and interest are $ 50,000 or less. You can also call the phone number on your federal and state tax account to start the application. Finally, you can submit a paper application using Form 9465-FS, Request payment Agreement If your tax bill is over $ 50,000, you will also need to fill out and file  Form 433-F, Collection Information Statement.  

How payments can be made

Payment agreements can be made using the following methods:
  • Deduction from salary.
  • Direct debit from bank account.
  • Check or money order.
  • Electronic Federal Tax Payment System (EFTPS).
  • Credit card.
  • Online Payment Agreement (OPA).
 

Situations in which the IRS revokes a payment agreement

The IRS can revoke a payment agreement under the following circumstances:
  • The taxpayer skips a payment
  • The taxpayer does not file a tax return or pay taxes after entering into the agreement.
  • The taxpayer provided information that was incorrect on form 433-F.
  • The taxpayer is paying under a partial payment agreement and a review indicates changes in his financial situation.

Can I request an extension for the payment of taxes?

Sometimes you may need more time before filing your tax return. If you are having trouble filling out paperwork, you need more time to raise money to pay your taxes, or for some other reason. In general, the IRS allows you to request an automatic 6-month extension if you file a Form 4868 requesting an automatic extension. However, you cannot simply file an extension in the hope of not paying your taxes. Although the IRS does not require an explanation of why you are requesting an extension, you have to pay the taxes you owe on time. To request an extension, you must calculate your 2009 tax obligations, and although you do not have to pay the full amount you owe, you will have to pay interest on what you owe. Remember,   

What if I can’t file my tax return on time?

If you cannot file your federal tax return by April 15, or can’t pay the taxes you owe, there are simple steps you can take to avoid negative consequences. First, you can get an automatic four-month extension until August 15 by filing the Internal Revenue Service (IRS) Form 4868, which is called the Application for an Automatic Extension of the Deadline to File the Individual Return Income Tax, as long as you file it with the IRS before April 15. Then, if August 15 is coming up and you need more time, you can ask for an additional two-month extension, which will be given if you have good reason. If you are granted a second extension of time, you will have until October 15 to file your return.   However, keep in mind that obtaining an extension of time to file your tax return does not give you an extension to pay the taxes you owe. If you know you owe taxes, you should send the IRS as much money as possible, along with your extension request, by April 15. Otherwise, if you don’t pay at least 90% of the taxes you owe, the IRS will charge you interest and penalties for the taxes you owe, ranging from 0.5% to 1% per month on what you owe.   Also, if you don’t pay most of the taxes you owe, and don’t ask for an extension before April 15, the penalties and even more are, ranging from 5% to 25% per month on what you owe, plus interest. As you can see, it is much worse not filing your tax return on time or asking for an extension than filing your return and not being able to pay all the taxes you owe.   Federal taxes are one of those accounts that should be prioritized. If you don’t file your tax return, the government has six years to file criminal charges against you. However, once you file your tax return, there is no time limit for the IRS to recover back taxes, penalties, and interest. Plus, you won’t be able to get rid of back taxes through a bankruptcy. However, if you owe a large amount of back taxes, it would be wise to contact an attorney who specializes in tax matters for assistance in dealing with the IRS and perhaps negotiating some kind of plan with the IRS to pay your taxes overdue.