What if I can’t pay my taxes?

Don’t panic. If you cannot pay the full amount of taxes you owe, you should still file your return by the deadline and pay as much as you can to avoid penalties and interest. The IRS may be able to provide some relief such as a short-term extension to pay, an installment agreement or an offer in compromise, or by temporarily delaying collection by reporting your account as currently not collectible until you are able to pay. In some cases, the IRS may be able to waive penalties.

Temporarily Delay the Collection Process

If IRS determines that you cannot pay any of your tax debt, they may report your account currently not collectible and temporarily delay collection until your financial condition improves. Being currently not collectible does not mean the debt goes away, it means the IRS has determined you cannot afford to pay the debt at this time. Prior to approving your request to delay collection, they may ask you to complete a Collection Information Statement (Form 433-F, Form 433-A or Form 433-B) and provide proof of your financial status (this may include information about your assets and your monthly income and expenses). You should know that if they do delay collecting from you, your debt will increase because penalties and interest are charged until you pay the full amount. During a temporary delay, they will again review your ability to pay. IRS may also file a Notice of Federal Tax Lien to protect the government’s interest in your assets.