Tax Tip #273

Owe the IRS money? Make a secure payment online at IRS.gov/payments. Even if you can’t pay the full amount right now, paying what you can helps reduce interest and penalties. 

What to know: 

• Late filing penalty: Usually 5% per month on the unpaid balance
• Interest: Currently 7% per year, compounded daily
• Late payment penalty: Usually 0.5% (one-half of one percent) per month 

Online payment plan options:

• Online Payment Agreement
• Setup fees may apply. 
• Short-term payment plan
• For balances under $100,000 in combined tax, penalties, and interest. 
• Gives a taxpayer up to 180 days to pay their balance in full.
• No setup fee.
• Long-term payment plan 
• New Simple Payment Plan criteria make it easier and more accessible to enter a long-term payment plan when the total balance owed is less than $50,000 in combined tax, penalties, and interest.

Once the online application is complete, taxpayers are notified immediately if their plans are approved. 

Another option is an Offer in Compromise. This option allows the taxpayer to settle a tax liability for less than the total amount owed. Use the Offer in Compromise Pre-Qualifier tool on IRS.gov to see if you qualify. 

Not sure if you owe the IRS? Use their Individual Online Account tool to find out.