So you owe the IRS money on your current year’s tax return or you filed your return for last year without paying the balance due and now you received a balance due notice from the IRS. Not sure what to do? Well, you can request an installment agreement to spread your payment out over an extended period of time; or you can ask for an interest free extension of time to pay.
Seriously, you can call the IRS and ask them to extend your time to pay the tax due for a period of up to four months. You can make payments in any amount during that time or you can choose not to pay anything until the four month deadline arrives.
The advantage to choosing this option over an installment agreement is that the balance due does not continue to accrue interest charges and the one time set-up charge for an installment agreement is not incurred. However, an installment agreement, when approved, usually can be extended over a year or sometimes longer. This may be your best choice if you are unlikely to accumulate and pay the total tax due in four months.
The disadvantage of selecting an extension of time to pay your tax over selecting the installment agreement option is that you have a shorter time period to accumulate the total amount of tax that you owe to the IRS. If the payment is not made by the extended due date, penalties, interest and collection activities will begin.
It is important to understand that filing Form 4868, Application for Automatic Extension of Time to File US Individual Income Tax Return, for additional time to file your tax return is not the same as calling and requesting an extension of time to pay your tax. Filing Form 4868 for an automatic extension does NOT extend your time to pay your tax without assessment of penalties and interest.
To request an extension of time to pay or for additional information you can call the IRS at 1-800-829-1040 and follow the voice prompts.
Any U.S. tax advice contained in this electronic communication was not intended or written to be used, nor can be used, by any recipient of this communication for the purpose of avoiding penalties that might be imposed pursuant to the Internal Revenue Code or U.S. Treasury Regulations, or any other state or local law or regulation.
Content of this site is not intended to replace professional consultation and all information is subject to changes to federal, state and local tax laws and policies.