Installment #14 in the IRS’ Summertime Tax Tips series is for people who owe money to the IRS.
Here is what the IRS recommends:
1. Get a loan and/or pay what is owed with a credit card. Fair enough. If the interest rate on the loan or the card is better than what will accrue in interest and penalties, sometimes it is best to just pay it off.
2. Request additional time to pay. Ok, but the most you will get is probably 90 days.
3. Pay it back in installments, pay it back through Electronic Funds Transfer, or pay it back online. Great tips IF you can afford to pay, but a lot of people owe the IRS because they can’t afford to pay.
4. Set up an installment agreement by mail (balances under $25k), or complete a Form 433F (balances over $25k).
5. Save money on the installment agreement processing fee allowing the IRS to automatically deduct payments from your bank account.
6. Change your withholdings so you don’t owe again.
Are you seeing a theme here? Almost all of these “tips” involve paying the IRS back in full, in one form or another. What is lacking from this set of tips is any guidance for taxpayers who really can’t pay what they owe. But I also understand that the IRS doesn’t want to advertise the other options; that would not be in their best interest.