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If you’re having tax problems

What to Do If You Need to File But Can’t Pay Your Taxes

Unfiled tax returns

Unpaid Taxes, Unfiled Returns

If you owe taxes to the IRS, you owe the tax whether or not your file. Some taxpayers avoid filing because they can’t pay their tax bill, but this doesn’t do anything to eliminate the tax debt.

Failing to file also results in penalties and interest. Instead of trying to hide from the IRS, take one of the following actions when you need to file but can’t afford to pay your taxes.

File and Pay What You Can

You can file your tax return without paying the full balance. You may still face late payments penalties and interest, but you’ll avoid the failure-to-file penalty, which is higher than the late payment penalty.

You may also want to try to avoid owing a large tax bill next year. If you are an employee, you may need to adjust your withholding. Self-employed taxpayers can adjust their estimated tax payments so that they pay the majority of their taxes throughout the year, rather than paying off most of the balance when they file their return.

Request an Extension

You can get an automatic, six-month extension to file your tax return. However, this only gives you an extension to file, not an extension to pay.

This is still a better option than doing nothing because you’ll avoid the failure-to-file penalty. You have the option of submitting a partial payment when you request the filing extension.

Payment Options

If you just need a little more time to pay your taxes, you can apply for a short-term payment plan. You can get up to 120 days to pay off your balance. You can apply online if you owe less than $100,000, and there is no fee to apply.

If you need a longer repayment period, you can apply for an installment agreement. You may have to pay a setup fee, and penalties and interest will continue to accrue until your full balance is paid.

Other payment options may also be available, including Offers in Compromise or having your account classified as Currently Not Collectible.

Don’t Avoid Filing Your Tax Return

If you haven’t filed all of your tax returns, the IRS may reject your installment agreement request or Offer in Compromise. You’ll still owe the tax, but you’ll limit your options for solving your tax problems.

Contact An Attorney

Ayar Law provides creative solutions to your tax problems, including Offers in Compromise and audit defense. Call us at 248-262-3400 to schedule a consultation with one of our tax attorneys.

Venar Ayar, Esq.

Venar Ayar, Esq.

Attorney-at-Law, Master of Laws in Taxation
Principal and founder, Ayar Law

Venar is an award-winning tax attorney ranked as a Top Lawyer in the field of Tax Law. Mr. Ayar has a Master of Laws in Taxation – the highest degree available in tax, held by only a small number of the country’s attorneys.