- 1). Call the IRS as soon as possible after a payment has not been made on the due date. When the taxpayer fails to make a payment on time under the terms of their installment agreement, they are said to have defaulted. The IRS gives the taxpayer 30 days from the date of default to contact them before they start the process of collection. Calling them within this 30-day window keeps the taxpayer in compliance and gives her an opportunity to remedy the default.
- 2). Make the tax payment after calling the IRS to remedy the default. Making the payment shows good faith on the part of the taxpayer and demonstrates to the IRS her responsibility and accountability. Making large payments is always a good idea because it lessens the burden of penalties and interest applied to the remaining balance you owe.
- 3). Consider other options if the tax burden is still too much. The IRS allows alternate means to pay back income tax. Taxpayers can apply for an extension of up to 120 days to pay the balance in full. The IRS may allow them to defer their taxes until their financial situation improves. Taxpayers may also qualify to settle taxes for less than the full amount owed by signing an Offer in Compromise. To qualify for an Offer in Compromise, a taxpayer must convince the IRS that the tax liability is not accurate, that she would be not able to pay the full amount due within the statutory period of collection, or that paying the full amount would create an economic hardship for her.
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