WASHINGTON (AP) Is your tax bill more than you can handle right now? The IRS offers a broad array of options for those who can't immediately pay the balance of taxes owed.
- Electronic Withdrawal. Taxpayers who complete their tax returns early but need a little time to amass the money to pay their taxes can file the return electronically and arrange for an electronic withdrawal later. Taxpayers can specify the date of the funds transfer, which means they can file their tax return and wait until as late as April 15 to pay the bill.
- Credit Card. Taxpayers can pay taxes due by credit card for a small fee charged by the credit card payment service provider. The payment would appear on your credit card statement as, ''United States Treasury Tax Payment.'' The convenience fee is billed separately. Your credit card statement, along with a confirmation number, provides proof of payment.
Taxpayers who want to pay by credit card should visit the Electronic Payment Options section of the IRS Web site. They can pay through a variety of tax preparation software and professional tax services or by calling one of the credit card payment service providers: LINK2GOV Corp. at 1 (888) PAY1040 or Official Payments Corp. at 1 (800) 2PAY-TAX.
The payment would be subject to the same interest rates and fees as generally apply to purchases on your credit card. Tax experts suggest you compare the total cost of paying by credit card, including interest rates, with the current interest rates and penalties charged by the IRS for installment agreements.
- Installment Agreement. Installment agreements allow taxpayers to pay their taxes in monthly amounts that fit their budgets. The IRS will charge interest and penalties, as well as a one-time $43 fee to set up the installment account. Form 9465 is used to request an installment payment plan. For most taxpayers who owe $25,000 or less in tax, an installment agreement is automatic.
- Offer in Compromise. Taxpayers with large unpaid tax bills and no means to pay the full amount can make an offer in compromise, in which they ask the IRS to accept an offer to pay a lesser amount. Form 656 is used to make such an offer and requires a $150 application fee. If a taxpayer defaults on a negotiated payment plan for an offer in compromise, the entire original tax liability will be reinstated, plus interest and penalties.
Important: Taxpayers who can't pay are nevertheless urged to file their returns by the April 15 deadline. They can face steep fines for failing to file, on top of the penalties and interest charged for late payment.
On the Web:
IRS Electronic Payment Options - http://www.irs.gov/efile/article/0,,id97400,00.html
LINK2GOV Corp. - http://www.PAY1040.com
Official Payments Corp. - http://www.officialpayments.com
Peninsula Clarion ©2013. All Rights Reserved.