Have Tax Questions? Ask a Tax Expert for Answers ASAP
Hello JA Customer,
If you cannot afford to pay the amount that you owe all at one time, you can set up a payment plan with the IRS to pay off this debt over a period of time. The drawback to this is that interest and penalties will continue to accrue on the amount until it has been paid in full. But it will at least buy you some time to get the taxes paid.
There are situations where you can submit an Offer in Compromise to try and get your tax debt lowered, but to be honest with you in a situation where you only owe $1,500, it is not likely that an OIC would be successful. The IRS has 10 years time in which to pursue collection of a tax debt. So they would look at not only your current income and assets, but would also look at your future earnings potential. So it is not likely they would reduce the amount you owe, as this seems like something they would be able to collect over a 10 year period of time.
If you set up a payment plan with the IRS, then as long as you stay current on your payments the IRS would not pursue other means of collection which could include liens or levies on your wages and other assets.
Since the amount that you owe is less than $25,000, the IRS actually has an on line application on their website which you can complete to set up an installment payment agreement.
Thank you JA Customer
but I have not filed my taxes yet. Can I still set up an installment plan, or at the time that I file the taxes set up the payment plan?
Hello again JA Customer,
You should not set up the payment plan until you actually file your return. When you file your return, send in whatever amount you can initially afford to pay with the filing. You can then go on line and fill out the payment plan application to set up payments for the remainder of the amount due.