options for taxpayers who owe money to the IRS
Taxpayers who can't pay their tax bill by the April 15, 2024,
deadline shouldn't panic – the IRS is here to help. There are several options
to help taxpayers meet their obligations.
It's important for taxpayers to file their tax return or request
an extension of time to file at IRS.gov/extension by
the April 15, 2024, deadline – even if they can't pay their full tax bill. This
will help them avoid a failure to file penalty.
This extension applies only to the filing deadline, not the
payment deadline. Except for eligible victims of recent natural disasters who
have until Oct. 15 to make various tax payments, taxpayers who can't pay the
full amount of taxes they owe by April 15 should file and pay what they can.
Making a payment, even a partial payment, will help limit penalty and interest
charges.
Help
for taxpayers who can’t pay in full
The IRS has options available to
help those who owe a tax obligation and can't pay all or part of it. Those
struggling to meet their tax obligation may consider these options to resolve
their tax bill.
Online
payment plans
Taxpayers who owe but can’t pay in full by April 15 don't have
to wait for a tax bill to set up a payment plan. They can apply for a payment
plan at IRS.gov/paymentplan.
These plans can be short- or long-term.
Short-term
payment plan
– The payment period is 180 days or less, and the total
amount owed is less than $100,000 in combined tax, penalties and interest.
Long-term payment plan
–
The payment period is longer than 180 days, paid in monthly payments, and the
amount owed is less than $50,000 in combined tax, penalties and interest.
Offer
in compromise
An
offer in compromise lets
taxpayers settle their tax debt for less than the full amount they owe. It may
be an option if they can't pay their full tax liability or doing so creates a
financial hardship. The IRS considers a taxpayer's unique set of facts and
circumstances when deciding whether to accept an offer.
Taxpayers can see if they're eligible and prepare a preliminary
proposal with the
Offer in Compromise
Pre-Qualifier Tool
.
Penalty
relief to eligible taxpayers
Taxpayers
may qualify for penalty relief if
they tried to comply with tax laws but were unable due to circumstances beyond
their control.
Penalties
may apply
Taxpayers who owe tax and don't file on time may be charged a
failure to file penalty. This penalty is usually five percent of the tax owed
for each month or part of a month that the tax return is late, up to 25
percent. The failure-to-pay penalty applies if a taxpayer doesn't pay the taxes
they report on their tax return by the due date.
Interest is based on the amount of tax owed and for each day
it's not paid in full. The interest is compounded daily, so it’s assessed on
the previous day's balance plus the interest. Interest rates are determined
every three months and can vary based on type of tax -- for example, individual
or business tax liabilities. More information is available on the interest page of
IRS.gov.