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.  The state of California uses Form 3582.  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 6 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.

If you will never be able to pay the taxes you owe, consider filing an Offer in Compromise.  There is a new streamlined program for people who owe less than $50,000 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 6 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
January, 2019