Tax season can be complicated, and for many people, the biggest concern on April 15 each year is not just how much they owe, but how long they have to pay. After all, millions of Americans find that they owe more on their taxes than they can immediately afford to pay out of pocket each year, but a delinquent tax bill can have serious consequences, including penalties, interest and legal ramifications. So, understanding your payment options is crucial if you find yourself in this situation.
Luckily, while the Internal Revenue Service (IRS) might seem intimidating, it offers several options to help taxpayers manage their tax liabilities without facing extreme financial hardship. So, there can be more flexibility than you’d expect for taxpayers who communicate their situation and take steps to resolve their balances, whether they need a short extension or a long-term payment plan. But what exactly are the timeframes the IRS provides for tax payments — and what can you do if you find yourself falling behind?
Find out how a tax relief service could help settle your IRS tax debt.
How long does the IRS give you to pay your taxes?
The IRS offers several different timelines for paying your tax debt, depending on your specific situation and how much you owe. The most straightforward option is a 120-day extension, which doesn’t require any setup fees and can be arranged through a simple phone call or online request. This short-term payment plan is available for taxpayers who owe less than $100,000 in combined tax, penalties and interest.
For those who need more time, the IRS offers long-term installment agreements that can stretch up to 72 months. These agreements are available for individuals who owe $50,000 or less in combined tax, penalties and interest. If you owe more than $50,000, you may still be able to qualify for a payment plan, but you’ll need to provide detailed financial information and may need to work with the IRS to determine an appropriate payment schedule.
It’s important to note that even if you set up a payment plan, interest and some penalties will continue to accrue until your balance is paid in full. However, these charges are typically much lower than what you’d pay using credit cards or personal loans to pay your tax debt.
Learn how a tax relief company could benefit you now.
What to do if you’re behind on paying your taxes
If you find yourself unable to pay your tax bill, the worst thing you can do is nothing. The IRS has several programs designed to help taxpayers who are struggling with their tax payments, but you need to be proactive about reaching out and setting up arrangements. Even if you can’t pay anything right now, contacting the IRS shows good faith and may help you avoid more severe collection actions.
Your first step should be to evaluate your payment options. If you can pay the full amount within 120 days, the short-term payment plan may be your best choice. For longer-term needs, consider applying for an installment agreement. If you’re experiencing serious financial hardship, you might qualify for an Offer in Compromise, which allows you to settle your tax debt for less than the full amount owed. These are only approved in specific circumstances, however.
Working with a tax relief company can also be a smart option when you’re dealing with significant tax debt or complex payment situations. These companies employ tax professionals, including enrolled agents, CPAs and tax attorneys, who can:
- Analyze your financial situation and recommend the best payment options
- Help you apply for appropriate IRS payment programs
- Negotiate with the IRS on your behalf
- Potentially help reduce penalties
- Assist with stopping or preventing wage garnishments and tax liens
That said, it’s important to do your research when selecting a tax relief company. Look for established firms with good reputations and verified credentials but be wary of companies that make unrealistic promises about settling your tax debt for “pennies on the dollar.” A reputable firm will provide a realistic assessment of your options based on your specific financial situation.
The bottom line
The IRS is more flexible than many people realize when it comes to tax payment timeframes. Whether you need a few extra months or several years to pay, options are available. The key is to be proactive. File your returns on time, communicate with the IRS about payment difficulties and set up a formal payment arrangement rather than ignoring the situation. While extensions and payment plans can give you more time to pay, they don’t stop interest and penalties from accruing, so keep that in mind, too. Ultimately, the sooner you can pay your tax debt, the less you’ll pay overall.
