Nicholas P. DiNatale, CPA -
Certified Public Accounting & Business Advisory

Taxpayer Resources - FAQ

I cannot afford to pay my balance due!! What can I do?

First, don’t panic…Assess the situation. Do you have your return completed? If so, you should file it even if you cannot pay the balance due. The penalties for late filing (5% of the balance due per month up to 25%) are much higher than those for late payment (.5% of the balance due per month up to 25%).

The IRS has provided an opportunity to pay the balance due in installments. You will pay the balance monthly as if it was a loan, and like the bank, they will charge you interest plus any applicable penalties. There is also a small fee ($43) to process your installment request. Generally, the IRS will want you to pay your balance due by the next return due date, but may extend the agreement up to 5 years. To apply, prepare form 9465 Installment Agreement Request and attach to your return. You can find form 9465 and the related instructions at the IRS website.

Some hints: the IRS will like to see you paying something with the return. You should make an effort to pay as much as possible at this point. The installment agreement will ask you how much your monthly payment should be and what day it is due. Between the time you send in your installment agreement and when you receive your confirmation letter, you should make your payments in the amount and on the date you requested. Remember, penalties and interest are accruing.

Taxpayers relying on this method of payment often find themselves in a never ending cycle where they pay last year’s balance due with the money that should be paying this year’s tax. When the current year’s return is due, many taxpayers have not paid in enough tax and the cycle begins again. This is not the most efficient way to pay the balance down, and anyone considering this method should weigh their options before applying for installment payments.

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