Can’t Pay Your Taxes? Four Things You Should Know

By Michel Mora · Mar 24, 2019 3 min read

Tax Help

What to do when you can’t pay the IRS

Owe more than you can pay this tax season? Don’t panic. Filing on time, paying what you can, and contacting the IRS can limit penalties — and Billshark can help free up the cash.

As April 15^th looms, do you have a knot in your stomach because you can’t pay what you expect to owe? Then Billshark has some solutions for you.

1 Why So Many Owe This Year

The new Republican tax law has resulted in many taxpayers owing money, even when they haven’t in the past. One reason is that some people didn’t adjust their withholding at work when the new rules went into effect.

An even bigger reason—resulting in some shockingly high tax bills—is the loss of many previous allowable deductions: property and local income taxes (known as SALT, or state and local taxes); personal exemptions (last year, $4,050 for yourself and each family member); the interest on home equity loans; moving and job-related expenses; and, tax preparation fees. Thus, many are finding they owe thousands of dollars this year.

2 What To Do

1. File on time

Whether or not you have the money to accompany your return, file it! The IRS will assess penalties not only on the unpaid money owed, but also for not filing a return. The late fee on taxes owed is one-half of one percent; the penalty for filing late is five percent a month on the money owed. You can file for an extension (IRS Form 4868) and avoid the penalty attached to missing the April 15^th deadline. But any money you owe is still due on April 15^th, and the penalty and interest will start accruing on that date, unless you paid 90 percent of the money owed by April 15^th.

2. Pay as much as you can

Because penalties are assessed only on the amount owed, pay as much as you can of what you owe. This also demonstrates to the IRS a good-faith effort on your part. Do not borrow money on credit cards or loans unless the interest rate is below the half-percent you’d pay the IRS.

3. Contact the IRS

If you can’t pay your bill, contact the IRS immediately. Contrary to the image the IRS-haters would have you believe, the agency is staffed by professional people who understand that sometimes people encounter unusual circumstances. This is especially true this year, when the fallout from the new tax revision caught so many people by surprise.

3 What the IRS Says

“Don’t panic. If you cannot pay the full amount of taxes you owe ... contact the IRS to discuss your payment options at 1-800-820-1040. The agency may be able to provide some relief such as a short-term extension to pay, an installment agreement or an offer in compromise, or by temporarily delaying collection by reporting your account as currently not collectible until you are able to pay. In some cases, the agency may be able to waive penalties. However, the agency is unable to waive interest charges which accrue on unpaid tax bills.”

4 What Not To Do

There is one and only one “don’t” under this category, and that is, don’t pay one of those endlessly advertised “tax relief” companies you see on television and radio this time of year. The legitimate ones (and they are few and far between) will take money to do what you can do for yourself directly through the IRS. The illegitimate ones (the vast majority) will take your money, string you along, then disappear, leaving you high and dry.

The Federal Trade Commission (FTC) warns:

“If you pay [tax relief companies] an upfront fee, which can be thousands of dollars, these companies claim they can reduce or even eliminate your tax debts and stop back-tax collection by applying for legitimate IRS hardship programs. The truth is that most taxpayers don’t qualify for the programs these fraudsters hawk, their companies don’t settle the tax debt, and in many cases don’t even send the necessary paperwork to the IRS requesting participation in the programs that were mentioned. Adding insult to injury, some of these companies don’t provide refunds, and leave people further in debt.”

Avoid these firms like the plague!

If you owe the government money, let Billshark find the hidden savings on your bills. That’s easy money in your pocket that you can put toward your tax bill (or anything else you’d like).

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Frequently Asked Questions

Should I file my tax return even if I can’t pay?

Yes. File on time whether or not you have the money to accompany your return. The IRS assesses penalties not only on the unpaid money owed, but also for failing to file a return. The late fee on taxes owed is one-half of one percent, while the penalty for filing late is five percent a month on the money owed, so filing on time is far cheaper than skipping it.

What is IRS Form 4868 and does it delay my payment?

IRS Form 4868 lets you file for an extension and avoid the penalty attached to missing the April 15th deadline. It does not delay your payment, though: any money you owe is still due on April 15th, and penalty and interest start accruing on that date unless you paid 90 percent of the money owed by April 15th.

Why do I owe taxes this year when I didn’t before?

The new Republican tax law left many taxpayers owing money. One reason is that some people didn’t adjust their withholding at work. An even bigger reason is the loss of many previous deductions, including SALT (state and local taxes), personal exemptions, interest on home equity loans, moving and job-related expenses, and tax preparation fees.

What relief options can the IRS offer if I can’t pay?

Contact the IRS at 1-800-820-1040 to discuss payment options. The agency may provide relief such as a short-term extension to pay, an installment agreement or an offer in compromise, or temporarily delaying collection by reporting your account as currently not collectible. In some cases it may waive penalties, but it cannot waive the interest charges that accrue on unpaid tax bills.

Are advertised “tax relief” companies worth paying?

No. The one “don’t” is paying those endlessly advertised tax relief companies. The legitimate few charge for what you can do yourself through the IRS, and the illegitimate majority take your money and disappear. The FTC warns that most taxpayers don’t qualify for the programs they push, and these firms often don’t settle the debt or provide refunds.

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Owe more than you can pay this tax season?.

As April 15 th looms, do you have a knot in your stomach because you can’t pay what you expect to owe?.

The new Republican tax law has resulted in many taxpayers owing money, even when they haven’t in the past.

An even bigger reason—resulting in some shockingly high tax bills—is the loss of many previous allowable deductions.

Whether or not you have the money to accompany your return, file it!.

Because penalties are assessed only on the amount owed, pay as much as you can of what you owe.

If you can’t pay your bill, contact the IRS immediately.

There is one and only one “don’t” under this category, and that is, don’t pay one of those endlessly advertised “tax relief” companies you see on television and radio this time of year.

The Federal Trade Commission (FTC) warns.

“If you pay [tax relief companies] an upfront fee.

Avoid these firms like the plague!.

If you owe the government money, let Billshark find the hidden savings on your bills .

Yes.

IRS Form 4868 lets you file for an extension and avoid the penalty attached to missing the April 15th deadline.

The new Republican tax law left many taxpayers owing money.

Contact the IRS at 1-800-820-1040 to discuss payment options.

No.

Billshark negotiates your bills for you — no savings, no fee.

Billshark helps lower internet, wireless, cable, satellite radio, and other monthly bills.

Our experts handle providers for customers and share updates throughout the process.

Customers pay only when Billshark finds savings on eligible bills.

1 Why So Many Owe This Year.

3 What the IRS Says.

Frequently Asked Questions.

Should I file my tax return even if I can’t pay?.

What is IRS Form 4868 and does it delay my payment?.

Why do I owe taxes this year when I didn’t before?.

What relief options can the IRS offer if I can’t pay?.

Are advertised “tax relief” companies worth paying?.

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Can’t Pay Your Taxes? Four Things You Should Know

1 Why So Many Owe This Year

2 What To Do

1. File on time

2. Pay as much as you can

3. Contact the IRS

3 What the IRS Says

4 What Not To Do

Frequently Asked Questions

Should I file my tax return even if I can’t pay?

What is IRS Form 4868 and does it delay my payment?

Why do I owe taxes this year when I didn’t before?

What relief options can the IRS offer if I can’t pay?

Are advertised “tax relief” companies worth paying?

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There's More Than One Way to Slay a Debt

Free Tax Prep: Spot Hidden Fees & Find Real Free Options

Reduce Financial Stress: Smart Tips for Paying Bills

How Workplace Benefits Can Help Your Finances

Avoid Job Scams: How to Spot Employment Fraud

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Can’t Pay Your Taxes? Four Things You Should Know page context