• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Wealth Pilgrim

No Money Worries. No Matter What.

Neal Frankle featured in
  • Home
  • Life Insurance
  • Investing
    • Build Strong Investment Building Blocks To Avoid Going Broke In Retirement
    • Systematic Mutual Fund and ETF Investing
    • Stock Market Investing Guide
    • Choosing the Right Investment Brokerage Guide
    • How Bonds Work Guide
    • How Banks Really Work Guide
    • Annuities – What You Need To Know Before You Invest
    • A Beginners Guide To Buying Individual Stocks
    • Create A Pool Of Great Mutual Funds and ETFs To Pick From To Secure Your Retirement
    • ETF and Index Fund Investment Guide
  • Earn More
  • Banking
  • Retirement Planning
    • Retirement Guide
  • Ask Neal a Question
  • Reviews
    • Upgrade Personal Loans Review
    • Lending Club Review
    • Prosper Review
    • Ally Invest TradeKing Review
    • CIT Bank Review
    • LegalZoom Review
    • Lexington Law Review
    • Airbnb Host Review
    • Should You Drive For Uber?
  • Tax
  • Courses
    • Raise Your Credit Score So You Can Buy a House – Free Video Course

Can’t Pay the IRS by April 15th? Your 3 Step Solution

by Neal Frankle, CFP ®, The article represents the author's opinion. This post may contain affiliate links. Please read our disclosure for more info.

When you think of April 15th and you can’t pay the IRS , what’s the first movie you think of?cant pay irs

Is it Temple of Doom?

If so, take a step back from the ledge. Even if you haven’t got the green to make the IRS monster back away, there are plenty of things you can do to protect yourself and get some debt relief from the IRS.

The first tool any Wealth Pilgrim uses to solve a financial problem is knowledge – so lets get some background.

You have two options if you haven’t filed your taxes yet. You can either file your return by the deadline and pay as much as you can or you can file an extension and pay what you can. Either way, you owe the tax starting April 15th. Filing an extension doesn’t mean the penalty and interest meter isn’t running.

If you haven’t paid the tax already, you’ll get a Notice of Tax Due and Demand for Payment from your friends at the IRS and you’ll receive that notice no later than June 1. This notice spells out your tax due plus the 4% penalty plus the 1% interest (per month) the IRS charges you. Oh….and one more thing…..the interest and penalties aren’t tax deductible.

At this point, the best step to take is to call your local IRS office. They’ll give you three options:

1. Installment Agreement.

You can request as much as 10 years to pay off your debt but the more time you ask for, the higher the likelihood that the bad boys at the IRS will place a lien on your property. This is not a good thing. Its public record and not great for your credit rating. It means that if you sell your property, the IRS has first crack atthe proceeds.

2. Temporary Delay Due To Hardship.

Contrary to popular belief, real human beings work at the IRS. If you have a hardship as a result of illness or natural disaster, they may grant you some leeway. If you find yourself in this situation, be completely honest and give it a try.

3. Offer in Compromise

If you owe so much that even the IRS realizes you can’t pay, they might make a deal and settle for less than you owe. Keep in mind that even a bankruptcy won’t cure your IRS ills. Consider credit cards and credit card alternatives if you can make a good enough deal. Bankruptcy proceedings will postpone IRS collection but it won’t stop them forever.

Two final ideas on dealing with the IRS:

First, even Indiana Jones needed Short Round to help him conquer the Temple of Doom. Get professional representation. Dealing with IRS without having professionals on your side is like trying to parachute out of a diving plane in a life-raft. Indy might pull it off…but don’t try it at home.

Second, keep the communication flowing.

If the IRS puts a levy on your property it only means they get their money if you sell the goods. If you ignore them and make the IRS gods angry, they’ll slap a lien on you – which means they’ll just seize your property. They can take your wages, bank accounts and even your VCR! Make them mad enough, and they can go after you in a criminal case as well.

Dealing with the IRS may not be as terrible as trying to escape from a snake pit…..but then again, I’ve never been in a snake pit. Do whatever you can to avoid this problem. Even if you don’t owe them money do whatever you can to avoid IRS audit flags.

Have you ever had to deal with the IRS? What is your best tip?


Tweet
Pin
Share1

Reader Interactions

User Generated Content (UGC) Disclosure: Please note that the opinions of the commenters are not necessarily the opinions of this site.

Comments

  1. Baker @ ManVsDebt says

    April 13, 2009 at 3:59 AM

    Neal,

    Great read. As the tax deadline approaches people whom owe a lot of money or who haven’t filed yet need good information. This is definitely helpful to those people.

    I’ve personally helped people initiate the phone call to work out a payment plan and have seen it be successful.

    Great work!

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Are You Human? * Time limit is exhausted. Please reload CAPTCHA.

Primary Sidebar

Who is Neal Frankle

Neal Frankle

I'm a Certified Financial Planner™ with more than 25 years of experience. I feel very blessed and hope to share my personal financial experience and professional wisdom with readers of WealthPilgrim.
Read More »

Stay Connected

Facebook Twitter YouTube RSS

More Categories

Career Development
College Funding
Credit Cards
Credit Score Fixes
Money and Marriage
Debt Relief
Estate Protection
Property Investment Loans
Small Business Strategies
Spend Less Money

Disclaimer

Wealth Pilgrim is not responsible for and does not endorse any advertising, products or resource available from advertisements on this website. Wealth Pilgrim receives compensation from Google for advertising space on this website, but does not control the advertising selection or content. Please do the appropriate research before participating in any third party offers. The information contained in WealthPilgrim.com is for general information or entertainment purposes only and does not constitute professional financial advice. Please contact an independent financial professional for advice regarding your specific situation. Wealth Pilgrim does not provide investment advisory services and is not a registered investment adviser. Neal may provide advisory services through Wealth Resources Group, a registered investment adviser. Wealth Pilgrim and Wealth Resources Group are affiliated companies. In accordance with FTC guidelines, we state that we have a financial relationship with some of the companies mentioned in this website. This may include receiving payments,access to free products and services for product and service reviews and giveaways. Any references to third party products, rates, or websites are subject to change without notice. We do our best to maintain current information, but due to the rapidly changing environment, some information may have changed since it was published. Please do the appropriate research before participating in any third party offers.


About · Contact · Disclaimer & Privacy policy

Copyright © Wealth Pilgrim 2021 All Rights Reserved