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Tax Blog

Do you have an IRS or State Tax Liability? What are your options?

Taxpayers often has their tax attorney what their options are if they are unable to pay their tax liability in full. Moreover, taxpayers often ask how to make payments to the IRS. Taxpayers who owe taxes can choose among the following payment options:

  • IRS Direct Pay allows payment directly from a checking or savings account. This service is free.
  • Electronic Federal Tax Payment System, or EFTPS. Pay by phone or online. This service is free.
  • Debit or credit card payment.  This service is free, but the processing company may charge a fee. Fees vary by company.
  • Check or money order made payable to the United States Treasury (or U.S. Treasury) either in person or through the mail.
  • Cash payments at some IRS offices or at a participating PayNearMe location. Some restrictions apply. Taxpayers should not send cash through the mail.

Taxpayers who are unable to pay their taxes in full should act quickly. Several payment options are available including:

  • Online Payment Agreement — Individuals who owe $50,000 or less in combined income tax, penalties and interest and businesses that owe $25,000 or less in payroll tax and have filed all tax returns may qualify for an Online Payment Agreement. Most taxpayers qualify for this option, and an agreement can usually be set up in a matter of minutes. Online applications to establish tax payment plans, like online payment agreements and installment agreements, are available Monday – Friday, 6 a.m. to 12:30 a.m.; Saturday, 6 a.m. to 10 p.m.; Sunday, 6 p.m. to midnight. All times are Eastern time.
  • IRS Installment Agreement — Installment agreements paid by direct deposit from a bank account or a payroll deduction will help taxpayers avoid default on their agreements. It also reduces the burden of mailing payments and saves postage costs. Even taxpayers who don’t qualify for a payment agreement may still pay by installment. Certain fees apply.
  • Delaying Collection — If the IRS determines a taxpayer is unable to pay, it may delay collection until the taxpayer’s financial condition improves.
  • IRS Offer in Compromise — Certain taxpayers qualify to settle their tax bill for less than the amount they owe by submitting an offer in compromise. To help determine eligibility, use the Offer in Compromise Pre-Qualifier tool.

What Can I do If I Can’t Pay my Tax Liability in Full?

If you have a tax liability, contact a tax attorney today to discuss your options.