Past Due Taxes

To avoid additional fines for not filing, we always recommend filing on time even if payment isn’t possible right away, rather than skipping the return altogether.

Below are the two main penalties and what they typically cost:

Failure to File: Interest owed plus a 5% penalty per month the return is late, up to 25% of the total bill. The IRS might even file a substitute return for you, which won’t include deductions or credits that could lower your balance.

Failure to Pay: Interest owed, plus a 0.5% monthly late fee.

Depending on your case, the IRS could take harsh collection actions, such as seizing wages, placing a lien on your property, or other enforcement measures.

1. Arrange a payment plan with the IRS.
   In some cases, you can create a installment agreement (installment plan) with the IRS. The terms depend on how much you owe and the time needed to pay off the debt.
2. Ask for a short-term payment extension.
   You can request extra time to pay the balance in full. There’s no setup fee, but interest and a 0.5% monthly penalty will continue to apply.
3. Apply for hardship status.
   The IRS provides options for financial hardship, such as the Offer in Compromise or Currently Not Collectible status. To qualify, you must prove that payment would create a serious financial strain under IRS guidelines.
4. Work with a qualified tax professional.
   The smartest move is often to hire an experienced tax expert to handle IRS communication for you. The process can be complicated, and errors may cost you more money. A professional can negotiate on your behalf and guide you toward relief and financial stability.