Tips If You Owe Money to the IRS

Here are some tips if you owe money to the IRS:

- If you receive a notice from the IRS, first check with a qualified tax preparer to make sure the tax assessment is correct before paying or making arrangements to pay. The IRS can make mistakes!

- If you get a bill for late taxes, the IRS expects you to pay the amount owed right away. - Based on your circumstances, you may be granted a short additional time to pay.

- With the combination of penalties and interest the IRS imposes for paying late, it might be cheaper to pay your tax bill with a credit card. For payments via credit card, the IRS uses processing companies, such as Link2Gov or RBS WorldPay, Inc.

- You can pay your balance by electronic funds transfer by using the Electronic Federal Tax Payment System. To use this service, call 1-800-555-4477 or visit

- If you cannot pay your liability in full, you can request an installment agreement with the IRS. This is an agreement between you and the IRS in which you pay your balance in monthly installment payments for a set length of time. All required returns must be filed and you must be current with your estimated tax payments in order to set up an installment agreement.

- If you owe less than $25,000 in tax, penalties, and interest, you can request an installment agreement online using the Online Payment Agreement application found at

- To request an installment agreement by mail, complete and mail IRS Form 9465, Installment Agreement Request, with the tax bill you received from the IRS. The IRS will contact you and tell you if your request is approved, denied, or if they need additional information.

- If you owe more than $25,000, along with completing form 9465, you must file Form 433F, Collection Information Statement.

- A one-time user fee is charged if an installment agreement is approved. The user fee for a new agreement is $105, or $52 if the payment is deducted directly from your bank account. For certain lower income individuals, the fee can be reduced to $43.

- If you pay your tax within six months, it is normally better not to set up an installment agreement. Penalties and interest will still accrue, but they will usually be less than the application fee.

- If you have a balance due on your tax return, you may want to consider changing your withholding on your form W-4 with your employer. A withholding calculator can be found at to help you determine how much should be withheld.