June or July Could Be Your Month To Receive An IRS Notice

The IRS will issue many tax bills during June and July for those taxpayers who filed returns for 2018 but did not pay.

If you are a taxpayer who has received a bill already or are anticipating a tax bill because you filed on time but did not pay in full, there are many options for paying what you owe.

You have the option of paying online, by phone, or by using your mobile device. If you still cannot pay in full, you should consider payment plans or compromise options.

Most importantly, DO NOT ignore the bill!

If a tax return was filed but the amount owed is unpaid, you will receive a letter or notice in the mail from the IRS, usually within a few weeks. These notices, including CP14 and CP501, which notify taxpayers that they have a balance due, are frequently mailed during June and July.

Recent major tax law changes affect most taxpayers, and while the vast majority are receiving refunds, others have discovered they owe tax this year. Many of them may qualify for a waiver of the estimated tax penalty that normally applies. See IRS Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts, and its instructions for details.

You are encouraged to pay as much of the taxes owed as soon as possible to minimize interest and penalties.

How To Make a Payment

Taxes can be paid anytime throughout the year. When paying, you should keep the following in mind:

Electronic payment options are the quickest way to make a tax payment.
IRS Direct Pay (bank account) is a free way to pay online directly from a checking or savings account.
You may also choose to pay with a debit or credit card. Although the payment processor will charge a processing fee, no fees go to the IRS.
The IRS2Go app provides mobile-friendly payment options. You can use Direct Pay or card payments on mobile devices.
You can also pay using your tax software when you e-file. If you used a tax preparer, you can ask the preparer to make the tax payment electronically.

Another option is to enroll in the Electronic Federal Tax Payment System and have a choice of using the internet or phone and using the EFTPS Voice Response System.

If you cannot pay in full, you have several options:

Set Up A Payment Plan

With the Online Payment Agreement, you can usually set up a payment plan (including an installment agreement) in a matter of minutes. Individuals who owe $50,000 or less in combined income tax, penalties, and interest likely qualify for an Online Payment Agreement.

Another option is to get a loan. In many cases, loan costs may be lower than the combination of interest and penalties the IRS must charge under federal law.

Make Paying Easier

Automating payments makes it easy to avoid default. Using direct debit from a bank account or a payroll deduction means you don’t have to remember to send in a payment. It also saves postage costs. User fees may apply, except to low-income taxpayers, but the fees are lower than fees for manual payment plans.

Pausing Collection

If the IRS agrees you are unable to pay, it may delay collection until your financial condition improves.

Settle For Less

The Offer in Compromise program allows some struggling taxpayers to settle their tax bill for less than the full amount due. User fees apply except to low-income taxpayers. This year’s Offer in Compromise guide and application can be found at www.irs.gov/OICbooklet. The online Offer in Compromise Pre-Qualifier tool can help taxpayers determine if they are eligible.

Check Tax Withholding

For many taxpayers, this year’s unexpected tax bill could have been avoided with a Paycheck Checkup. The IRS urges all taxpayers to check their withholding for 2019, including those who made withholding adjustments in 2018 or had a major life change.

Those most at risk of having too little tax withheld from their pay include taxpayers who itemized in the past but now take the increased standard deduction as well as two-wage-earner households, employees with non-wage sources of income, and those with complex tax situations.

You can figure out the appropriate withholding to your paychecks with the IRS’s Withholding Calculator on IRS.gov. It’s never too early to check withholding.

You Are Not In This Alone

If you are unsure how to handle a tax bill and you did your own taxes or used a seasonal tax preparation service, it might be wise to seek the advice of a tax professional who will look after your best interest.