The first bill you
receive will explain the reason for your balance due and require payment
in full. It will include the tax due plus penalties and interest that
are added to your unpaid balance from the date your taxes were due. You
can pay this bill by sending the IRS a check or money order payable to
United States Treasury with your notice. To pay by credit card, call
1–800–272–9829 or 1–888–729–1040.
If you cannot pay the balance in full, you should pay as much as you can
with the notice. Refer to Topic 202, Payment Options for Your Tax
Liability, for alternatives available for paying the remaining balance.
The unpaid balance is subject to interest which is compounded daily and
a monthly late payment penalty. Therefore, it is in your best interest
to pay your tax liability in full as soon as you can to minimize the
amount of interest and penalty charged. You might also want to consider
a cash advance on your credit card or a bank loan. The interest rate
your credit card issuer or bank charges may be lower than the
combination of interest and penalties imposed by the Internal Revenue
Code. It may also keep your tax debt from negatively affecting your
credit rating. For further information on interest and penalties, see
Alternative Payment Options Truth in Lending which is available on our
web site at www.irs.gov.
If you are unable to pay your balance in full, we may be able to offer
an individual payment plan based on monthly installments. Complete and
mail an Installment Agreement Request, Form 9465
(PDF), with your bill.
You can attach a voided check to your request to have your payment
deducted from your bank account each month. Direct debit installment
agreements provide you with the ability to make timely payments
automatically, therefore reducing the possibility of defaulting the
agreement. Some installment agreements can also be established over the
telephone. Refer to Topic 202, Payment Options for Your Tax Liability,
for more information. If you are experiencing a significant financial
hardship and are unable to currently pay anything, we may temporarily
suspend collection on your account. Interest and late payment penalty
will continue to accrue while you make installment payments or while
collection is suspended. In addition, if you are a member of the Armed
Forces, you may be able to defer payment of income tax that becomes due
before or during your military service if your ability to pay is
materially affected by your military service. For more information, see
Publication 3, Armed Forces' Tax Guide, which may be obtained by
accessing our web site at www.irs.gov.
Once all payment options have been considered and it is determined that
you do not qualify for an installment agreement, you may opt to file an
offer in compromise. An offer in compromise (OIC) is an agreement
between a taxpayer and the IRS that resolves the taxpayer's tax
liability. The IRS has the authority to settle, or compromise, federal
tax liabilities by accepting less than full payment under certain
circumstances. The IRS resolves less than 1% of its balance due accounts
through the offer program. For additional information on the program and
how you may qualify for consideration, refer to
Topic 204, Offer in
Compromise.
When you contact the IRS, you should be prepared to discuss your basic
income and expense information. To prepare, gather together all of your
information about your income, assets and necessary living expenses,
such as your most recent pay stubs, rent or mortgage payment amounts,
transportation expenses, etc. This will allow us to assist you most
effectively.
It is important to contact IRS and make arrangements to pay the tax due
voluntarily. If you do not take some action to pay your tax bill or
contact us to make arrangements to settle the account, we may take
enforced collection actions to secure payment.
Some of the actions we may take to collect taxes include:
Filing a Notice of Federal Tax Lien,
Serving a Notice of Levy; or
Offset of a refund.
We will describe each of these actions in further detail.
By filing a Notice of Federal Tax Lien, the government establishes its
interest in your property as a creditor. The lien is a claim against
your property, including property that you acquire after a lien is
filed. The lien is required by law to establish priority as a creditor
in competition with other creditors in certain situations, such as
bankruptcy proceedings or sales of real estate. Once a lien is filed, it
may appear on your credit report and it may harm your credit rating.
Therefore, it is important that you work to resolve your tax liability
as quickly as possible, before lien filing becomes necessary. Once a
lien is filed, the IRS generally cannot issue a "Certificate of Release
of Federal Tax Lien" until the taxes, penalties, interest, and recording
fees are paid in full.
Notice of a levy is another method the IRS may use to collect taxes that
are not paid voluntarily. This means we can, by legal authority, take
and sell property to satisfy a tax debt. This could include your wages,
bank accounts, Social Security benefits, and retirement income. If your
tax liability remains unpaid, the IRS may also levy assets such as your
car, boat, or real estate.
In addition, when you have an outstanding tax liability, any future
federal tax refunds that you are due will be offset by the amount you
owe. Any state income tax refunds you are due may also be levied, and
the proceeds applied to your liability.
If you believe the bill is inaccurate, write the IRS office that sent
you the bill, or visit your nearest IRS office. To help us correct a
problem, please include a copy of the bill and copies of any records,
such as the front and back of canceled checks or money orders, or other
information that will help us understand what you believe is wrong.
Please do not send your original documents. You may also call the IRS at
1–800–829–1040 to discuss why you disagree with the bill. Please have
the bill and your records at hand when you call.
You have rights and protections throughout the collection process.
Please refer to Publication 1, which provides additional information on
Your Rights as a Taxpayer. at www.irs.gov.
Related Articles:
Government Tax Lien
Tax Collection
Tax Payment Options
Offers In Compromise
