Randolph Law Firm, P.C.

The IRS collection process offers options for making payments

A taxpayer who owes a federal tax has several options to choose, depending on the taxpayer's circumstances. This article describes the different payment methods approved by the IRS, which apply to Nevada residents as well as those living in other states. If the taxpayer is ready to pay, the IRS recommends that the taxpayer use the free IRS Direct Pay service online. This will take the funds directly from one's checking or savings account.  

A taxpayer who gets a bill can make a partial payment on the amount but the unpaid balance will grow inordinately by interest and penalties. It is best to use available credit to pay off the whole amount or as much as possible. When necessary, ask the IRS for a short-term payment plan. If a person can pay in full within 120 days, this method is available. There is no user fee, but the agency will continue to apply interest and penalties until the obligation is paid in full.

For more long-term resolutions, there is the possibility of an installment agreement. The installment payments may be set up to be deducted automatically through Direct Pay. For this method get a copy of Form 9465, Installment Agreement Request, which can be downloaded at the IRS web site.

For the tough account that just can't be paid in full, try an offer in compromise. This is difficult to get approved, but may work where hardship can be shown. In this method, the debt is settled for an amount that is less than the total amount owed. There is an online pre-qualifier tool that one can use to see if he or she is qualified and to obtain a suggestion of a reasonable offer.

In some cases, the taxpayer who is an employee may be able to catch up by having more taxes taken out of his or her paycheck. In the case of contractors, the estimated tax may be increased. Whether one resides in Nevada or another state, one may consult Publication 594, which is called the IRS Collection Process. Of course, an attorney experienced in handling tax law issues can provide ongoing support and guidance.

Source: birminghamtimes.com, "IRS Tips to Help People Pay Their Taxes", Aug. 17, 2015

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