Paying Delinquent Taxes

If you missed the deadline to make a tax payment and are now delinquent, there are several options to pay the money you owe the Internal Revenue Service.

A missed payment does not necessarily mean the IRS will conduct a tax audit.  A missed payment also does not mean the IRS will necessarily begin aggressive tax collection procedures.

The IRS has a set process in place for handling delinquent taxpayer accounts.  The IRS will begin attempts to collect the debt by issuing letters through its Mail Correspondence Office.  It will issue up to three notices to the taxpayer informing them of their delinquent payments.

If the taxpayer fails to make a payment within a six-month period, the IRS will then send the debt into collections.  Sending the debt into collections generally involves the owner of the debt selling the debt to a collections service.  The collection service will then seek to obtain the money they paid the IRS from the taxpayer. The debt in collection will reflect on the taxpayer’s credit report.

When the debt is being sent to collections, the IRS will charge interest on the late payment.  The interest will accrue on the total amount due to the IRS.

To prevent interest penalties, being sent to collections, and a levy (a legal seizure of your property), communicate with the IRS as soon as you realize you will be unable to make a payment.  Tell the agency why you cannot make the payment and try to make arrangements for repayment.  The IRS understands that taxpayers fall on hard times.  The IRS and the taxpayer usually have the same goal of the taxpayer paying his or her debts.  As a result, the IRS can divide payments over a larger period of time to make payments more manageable for the taxpayer, or a one-year tax reprieve allowing the taxpayer to get their finances in order.

If a taxpayer would like a representative to speak with the IRS, the taxpayer should contact a tax attorney.

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