If you can't pay the tax you owe before the original due date, the balance is subject to interest and a monthly late payment penalty. There is also a penalty for not filing a tax return, so you must file it on time even if you can't pay your balance in full. If you can't pay the full amount of your taxes or fines on time, pay what you can now and request a payment plan. You can reduce future penalties by setting up a payment plan.
Some taxpayers are eligible to settle their tax bill for an amount lower than the total amount due, through a compromise offer. April 15 is usually the deadline for most people to file their individual income tax returns and pay any taxes due. If after reviewing it you think there is an error, write to the IRS office that sent it to you within the set time frame or call the number on your notification or bill for help. However, the total amount owed will continue to increase because penalties and interest will continue to accrue until the taxpayer pays in full.
Taxpayers who don't qualify for an online payment agreement may still be able to pay in installments. Often, you can borrow the funds needed to pay your taxes at a lower effective rate than the combined IRS interest and penalty rate. Offers require a partial payment of the amount of the offer, except for offers submitted due to doubts as to liability. The agency generally processes payment plans online faster than requests made with electronically filed tax returns.
Taxpayers who cannot pay the full amount of federal taxes they owe should file their tax return on time and pay as much as possible. For more information on IRS notices and bills, see Publication 594, The IRS Collection Process (PDF). We may be able to eliminate or reduce some fines if you acted in good faith and we can demonstrate reasonable cause why you were unable to comply with your tax obligations. Unpaid tax is the total tax that must appear on your return minus the amounts paid through withholding, estimated tax payments, and allowable refundable credits.
In many cases, borrowing costs can be lower than the combination of interest and penalties that the IRS must collect under federal law. For more information on penalty and interest charges, see chapter 1, Filing Information, of Publication 17, Your Federal Personal Income Tax. Making a good-faith payment as soon as possible can help establish that your initial failure to pay on time was due to reasonable cause and not to deliberate negligence.
