There are a number of circumstances and life events that could prevent taxpayers from paying their federal tax on time. Although most taxpayers who pay tax late will be assessed penalties and interest, there are several options for paying the tax in full or making arrangements to pay the tax owed over time.
Call the IRS at 1-800-829-1040 to determine the exact amount of your balance due. Remember, the penalty for failure to pay tax before the April 15th deadline is ½ of 1% of the unpaid tax for each month that the tax remains unpaid. The interest rate for unpaid tax is determined quarterly and accrues daily. Once you determine the total amount owed, then you can pay off the tax in full or make arrangements to pay the tax.
Log on to the Electronic Federal Tax Payment System (EFTPS) and make your payment online. You will first need to enroll and create an account, then you click on “Make a Payment” to pay all or part of your federal tax you owe. The service is available 24 hours a day, seven days a week and is free of charge.
Complete IRS Form 9465, Request for an Installment Agreement, if you cannot pay your overdue tax in full. Mail the completed form to the address listed in the instructions of Form 9465 (see Resources). An installment agreement allows you to make monthly payments to the IRS until the tax is paid in full. The IRS will approve or deny your request for an installment agreement within 30 days of receipt and will inform you in writing of their decision. If your request is approved, then you will be required to make a fee to initiate the agreement. If you elect to have funds electronically debited from your checking account, then your fee is reduced.
Pay your tax by credit or debit card using Official Payments Corporation or Link2Gov Corporation. Unlike EFTPS, both these companies charge a convenience fee to accept tax payments online.
Use IRS Form 843 to request that your late payment penalty be abated. Often the IRS will abate penalties for taxpayers who have a good history of compliance (those taxpayers who normally file and pay timely) or those with a reasonable cause for paying the tax late. Examples of reasonable cause include, but are not limited to; military service, overseas travel, incarceration or illness. Include a detailed account of the circumstance which prevented you from filing a timely return in the “Explanations” section of Form 843. If you require additional space, then attach a note to your Form 843.