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 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:
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