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July 15 has come and went . . . and the tax bill does not fit into your budget. . . what to do:

1. File anyway.  This stops the Failure to File Penalty.
2.  If can pay the balance by year end, make monthly payments.  Ask your tax pro for bill stubs. Pay at least every thirty days. In many cases, there is no need for installment agreement if can pay in full by year end (from experience).  There will be some interest and Failure to Pay Penalty.  Installment agreement fees can run from $31—225.00 in addition to the tax due.
3.  If extraordinary circumstances prevent payment, e. g. major illness or disability consider EITHER contacting the IRS to request a temporary collection delay (request delay in WRITING!)   OR
4. Talking to your tax professional about an Offer in Compromise (“OIC”). An OIC allows taxpayers to settle a tax debt by paying only a percentage of what is owed. The IRS writes off the remaining unpaid balance. (“Settle your tax debt for pennies on the dollar”) CAREFUL: Requires one of the three criteria to qualify:

a. Doubt as to liability (“I don’t owe it!”) or

b. Doubt as to collectability (I don’t have any money)

c. Effective tax administration

Meeting the above criteria does not guarantee IRS will accept the Offer Agreement. “Payoff” amount is determined by formula.  The OIC application is not a do it yourself project. If the application lacks any pertinent information or attachments, the IRS will return it unprocessed and will keep the application fee (Ouch!).

For more information on:

For IRS’ payment and Offer in Compromise see: https://www.irs.gov/paymentsor  https://www.irs.gov/payments/offer-in-compromise

Penalties see: https://www.irs.gov/businesses/small-businesses-self-employed/understanding-penalties-and-interest

To find a knowledgeable professional to assist in the Payment/ Collections/Offer in Compromise process see: https://taxexperts.naea.org/