Paying Taxes Due - What Are Your Options?

When you owe tax, what IRS and FTB payment options do you have?

You can pay by sending a check.  Print a Form 1040-V for the correct tax year from the IRS web site www.irs.gov.  Mail your IRS payment and the form to the address shown on page 4 of the instructions.   Be certain to use the form which shows the correct year.

You can pay the IRS electronically at their Direct Pay site without a fee.  You can pay the FTB at their Web Pay site.

You can pay using a credit card, which will charge a transaction fee.  The IRS has a page with links to the credit card companies you can use to pay your taxes.

If you owe less than $50,000, and you can pay the entire amount within 7 years, and you have filed all of your tax returns, you can set up an IRS payment plan online. The California tax payment plan ($25,000/5 years) is similar.

You might want to consider filing an Offer in Compromise.  There is a new streamlined program for people who owe less than $100,000 and have incomes of up to $100,000.  The IRS has a 2-page summary of the process, which includes a link to a pre-qualifier tool.

You need to consult an experienced CPA tax accountant if:
  • Your taxes due are more than $50,000 federal or $25,000 state.
  • You owe more than you can pay within 7 years
  • You have circumstances which you think the IRS should take into account when calculating the amount of tax, interest, and penalties you owe.

California note:  If you have ever made a tax payment greater than $20,000 or filed a tax return with a liability greater than $80,000, you cannot make any future payments by check.  You must pay by credit card or at the FTB's Web Pay site.

The IRS has a new tool to check your balance online. 

Bess Kane, CPA
September, 2021