Taxpayers who owed but failed to pay the Internal Revenue Service (IRS) for their 2018 tax filings will likely get a bill from the agency in June or July. Although filing on time likely saved these taxpayers penalty fees, they may still find themselves on the hook for late fees. As a result, it is wise to pay off your debt with the IRS as soon as possible.
The agency recently provided a publication with guidance on the best ways for taxpayers in this situation to address their outstanding balance. Key points from the publication include:
- Pay the bill. Likely the most obvious option, the agency encourages taxpayers to pay their tax bill as soon as possible. Those who are able to pay their bill have options. These include use of the IRS’ Direct Pay system, payment to the agency through the use of a debit or credit card as well as the availability of mobile-friendly payment options through the IRS2Go app.
- Propose a payment plan. Those who cannot pay in full could set up a payment plan with the agency.
- Consider an Offer in Compromise. This program that allows taxpayers to settle their tax obligations with the IRS for less than actually owed. Interested taxpayers apply through the IRS. The process involves review of the application documents as well as an investigation by the agency.
The IRS also encourages taxpayers who found themselves facing an unexpected tax bill to conduct a paycheck checkup. The process involves a review of your withholdings to better ensure you are taking enough out of your paycheck to cover your tax obligations, thus reducing the risk of a large tax bill when filing your returns.