Tax Panic: What to Do If You Can’t Pay

Get Rich Slowly has an interesting post about what to do if Uncle Sam comes calling and you’re too broke to pay.

    “The first route is via Form 9465, Installment Agreement Request (PDF). You supply the terms based on your ability to pay over the next few years. If the amount owed is under $10,000, the IRS will accept most reasonable offers to pay within 36 months. Otherwise, larger amounts may require further correspondence and data gathering for the IRS.”

Very interesting stuff. A must read if you’re short on your taxes this year. —MEGHANN MARCO

Taxpayer Panic: What To Do If You Can’t Pay Uncle Sam [Get Rich Slowly]

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  1. JT says:

    I did this once. I was getting charged interest in excess of my arranged payment. I put it on my credit card to get it down to a more reasonable 25% interest. Nothing like share-croppin’ on the fields of the american economy.

  2. alicetheowl says:

    Not to mention, the interest accrues daily, not monthly. So you can pay it off, only to get another bill for the interest that accrued waiting for your payment to arrive and clear. Spiffy, huh?

    You’re better off charging it, if you can.

  3. Joe Hass says:

    Allow me to add one other huge risk. If you go down the installment payment path, and screw up even once, the IRS can slap you with a lien, which goes on your credit report for at least seven years (even if it’s cleared), on par with a collection agency mark. To put this in perspective: if you’re one day late with a credit card payment, generally you don’t get hit with a 30 (even if you are, a 30 is less of a credit blemish than a lien).

    The author of the link suggests that this beats a credit card. I wholeheartedly disagree.

  4. greedyredhead says:

    I fourth this motion: On an IRS installment agreement, you’d better not screw up. Otherwise you will find yourself in line at the USPS, signing for a registered letter. Not nice.