Tax Tip 2023-35: Options for taxpayers with a tax bill they can’t pay
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Issue Number: Tax Tip 2023-35
Options for taxpayers with a tax bill they can’t pay
Taxpayers who can’t pay their tax bill by the April 18, 2023, deadline shouldn’t panic. The IRS offers several options to help them meet their obligations.
It’s important for taxpayers to file their tax return or request an extension of time to file at irs.gov/extension by the April 18, 2023, deadline – even if they can’t pay their full tax bill. Doing so will help them avoid a failure-to-file penalty.
This extension applies only to the filing deadline, not the payment deadline. Except for eligible victims of recent natural disasters who have until Oct. 16 to make various tax payments, taxpayers who can’t pay the full amount of taxes they owe by April 18 should file and pay what they can. Making a payment, even a partial payment, will help limit penalty and interest charges.
For taxpayers who cannot pay in full
Online payment plans
Offers in compromise
Taxpayers can see if they’re eligible and prepare a preliminary proposal with the Offer in Compromise Pre-Qualifier Tool.
The IRS offers penalty relief to eligible taxpayers
Here’s what taxpayers should know about possible penalties and interest
Interest is based on the amount of tax owed and for each day it’s not paid in full. The interest is compounded daily, so it is assessed on the previous day’s balance plus the interest. Interest rates are determined every three months and can vary based on type of tax; for example, individual or business tax liabilities. More information is available on the interest page of IRS.gov.
An extension of time to file is not an extension of time to pay. An extension only gives taxpayers until October 16, 2023, to file their 2022 tax return, but taxes owed are still due April 18, 2023.
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