tax tips — August 15, 2011

Ten Tips for Taxpayers Who Owe Money to the IRS

by Laura Tallent

Options for making tax payments to the IRSDuring these difficult economic times, with massive layoffs and high unemployment rates, many taxpayers will find it difficult to pay their taxes. To help, the IRS has implemented some payment options to assist struggling taxpayers in settling their tax liability. The purpose is to help individuals and small businesses fulfill their tax obligations without adding a financial burden to their already strapped bottom line.

Below are ten tips from the IRS to help taxpayers pay their tax debt:

  1. Tax Bill Payments - If you get a bill this summer for late taxes, you are expected to promptly pay the tax owed, including any penalties and interest. If you are unable to pay the amount due, it is often in your best interest to get a loan to pay the bill in full, rather than to make installment payments to the IRS.
  2. Additional Time to Pay - Based on your circumstances, you may be granted a short additional time to pay your tax bill. A brief additional amount of time to pay can be requested through the Online Payment Agreement application at or by calling 800-829-1040.
  3. Credit Card Payments - You can pay your bill with a credit card. The interest rate on a credit card may be lower than the combination of interest and penalties imposed by the Internal Revenue Code. To pay by credit card, contact one of the following processing companies: Link2Gov at 888-PAY-1040 (or, RBS WorldPay, Inc. at 888-9PAY-TAX (or, or Official Payments Corporation at 888-UPAY-TAX (or
  4. Electronic Funds Transfer - You can also pay your balance by electronic fund transfer, check, money order, cashier's check or cash. To pay using electronic funds transfer, you can use the Electronic Federal Tax Payment System - call 800-555-4477 or go online at
  5. Installment Agreement - You may request an installment agreement if you cannot pay the liability in full. This is an agreement between you and the IRS to pay the amount due in monthly installment payments. You must first file all required returns and be current with any estimated tax payments.
  6. Online Payment Agreement - If you owe $25,000 or less in combined tax, penalties, and interest, you can request an installment agreement using the Online Payment Agreement application at
  7. Form 9465 - You can complete and mail an IRS Form 9465, Installment Agreement Request, along with your bill in the  envelope you received from the IRS. The IRS will inform you (usually within 30 days) whether your request is approved, denied, or if additional information is needed.
  8. Collection Information Statement - You may still qualify for an installment agreement if you owe more than $25,000, but you are required to complete a Form 433F, Collection Information Statement, before the IRS will consider an installment agreement.
  9. User Fees - If an installment agreement is approved, you'll be charged a one-time user fee. The fee for a new agreement is $105, or $52 if  payments are deducted directly from your bank account. For eligible individuals with lower incomes, the fee can be reduced to $43.
  10. Check Withholding - Taxpayers who have a balance due may want to consider changing their W-4, Employee's Withholding Allowance Certificate, with their employer. A withholding calculator at can help you determine the amount that should be withheld.

For more information about the Fresh Start initiative, installment agreements, and other payment options visit IRS publications 594, The IRS Collection Process, and 966, Electronic Choices to Pay All Your Federal Taxes, also provide additional information regarding your payment options. These publications and Form 9465 can be obtained from or by calling 800-TAX-FORM (800-829-3676).

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