Tax Tips: What to do if you owe the IRS
Jan 25th 2008 11:00AM
Updated Jan 30th 2008 2:08PM
You should try to pay as much of the tax bill as you can right away. That will limit the interest and penalties you will get for paying late, and those can add up fast. The IRS does accept credit cards, so that might be one option for paying what you owe. Obviously, you've got to be careful with this option as well, because credit card debt is expensive too.
It's also possible to make an installment plan with the IRS, whereby you pay a certain amount toward what you owe each month. The IRS will be looking for you to stretch and pay off your balance as quickly as possible, so don't expect that they will accept a few dollars a month. Offer to pay as much as you can, as fast as you can. Just get it over with!
The worst thing you can do if you owe money to the IRS is to ignore it. They will get their money from you one way or another, and tactics can include taking money out of your bank account or putting a lien on your home. Contrary to what you may have heard, the IRS is often very reasonable when you're being forthcoming and cooperative.
More Tax Advice
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.