Action Line: Owe IRS and can't pay? Here's what to do
BY PHIL MULKINS World Action Line Editor
Sunday, April 15, 2012
4/15/12 at 3:23 AM
Read other stories to help you with your 2011 tax forms
Dear Action Line: I owe federal income taxes after a failure to withhold enough to cover it but can't afford to pay it all when I file my return. What are my options? - S.K., Tulsa.
Electronic payment options: The Internal Revenue Service says you should still file your return on time (by midnight Tuesday) and pay as much as you can with the return. Its website suggests five steps you can take to eliminate a late filing penalty, reduce the late payment penalty and cut down on interest charges. For electronic and credit card options for paying see tulsaworld.com/IRSelectropay You can also mail a check payable to the United States Treasury.
Loans or credit cards: Consider obtaining a loan or paying by credit card. The interest rate and fees charged by a bank or credit card company may be lower than interest and penalties imposed by the Internal Revenue Code.
Installment agreement: Request an installment payment agreement. You do not need to wait for the IRS to send you a bill before requesting a payment agreement. Options for requesting an agreement include using the Online Payment Agreement application ( tulsaworld.com/OnlinePaymentAgreement) and completing and submitting "IRS Form 9465-FS, Installment Agreement Request" ( tulsaworld.com/IRSForm9465FS) with your return. IRS charges a user fee to set up your payment agreement ( tulsaworld.com/OPASetupFee).
Extension of time to pay: Request an extension of time to pay. For tax year 2011, qualifying individuals may request an extension of time to pay and have the late payment penalty waived as part of the IRS Fresh Start Initiative.
To see if you qualify, get IRS "Form 1127-A, Application for Extension of Time for Payment" ( tulsaworld.com/IRSForm1127A). Your application must be filed by midnight April 17.
IRS mailed bill: If you receive a bill from the IRS, contact the IRS immediately to discuss these and other payment options. Ignoring the bill will only compound your problem and could lead to an IRS collection action.
IRS collection process: If you can't pay in full and on time, the key to minimizing your penalty and interest charges is to pay as much as possible by the tax deadline and the balance as soon as you can.
For more information on the IRS collection process see the "Owe taxes? Understanding the IRS Collection Efforts" series of eight short video clips ( tulsaworld.com/IRScollection). These include the topics, "Know your rights," "Ready to file and owe money," "Filed but didn't pay," "Have not filed," "Receiving bills from the IRS," "Want to pay but can't," "Ignored IRS bills" and "Your business owes taxes."
Original Print Headline: What to do when you owe, can't pay
Submit Action Line questions by calling 918-699-8888, emailing phil.mulkins@tulsaworld.com or by mailing them to Tulsa World Action Line,P.O. Box 1770, Tulsa OK 74102-1770.
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