What If You Owe a Bill to the IRS?

If you owe a tax bill, the IRS has all the options to collect the debt.

If you owe a tax bill, the IRS has all the options to collect the debt.

Your finances can change drastically from year to year, but if you owe a tax bill, the Internal Revenue Service wants its money regardless. The best thing you can do for yourself financially is to pay off your bill as fast as possible. If you don’t, the IRS will charge late fees and penalties that can double, or even triple, the original amount of your bill.

How Long Does the IRS Have to Tell You How Much You Owe?

When you file your income taxes, the IRS checks your forms and makes sure that the information is correct. If you owe money after the agency verifies your calculations, you'll receive a bill in the mail. The time frame for you to receive the bill varies, depending on when you filed your income taxes, but the IRS generally mails out bills during the summer months.

How Long Does the IRS Give You If You Owe It?

Generally, if you owe income taxes, the IRS expects you to pay your bill by April 15. If you can't pay your bill by the due date, take out a loan to pay your bill in full. When you are late paying, the IRS will charge you interest and penalties, which is often more than the interest you'll pay on a loan. Depending on your finances, the IRS might allow you a little extra time to pay, but you have to set up a payment agreement with the IRS. You can make an arrangement through the IRS website or by calling the IRS at 800-829-1040.

Can the IRS Keep Tax Refunds for Back Taxes Owed?

If you have a bill with a government agency, the Department of Treasury's Financial Management Service, which is part of the IRS, will hold your tax refund and put it toward your balance. A government debt can include child support, state taxes, federal taxes and state unemployment overpayments. If you owe federal taxes from last year, the FMS uses your refund toward your back taxes and, if any refund is left over, will send you the balance. You should receive a letter from the FMS outlining the amount of your refund, how much of it was kept and the name of the agency FMS paid.

Can the IRS Lower the Amount You Owe in Taxes?

Under some circumstances, you can try to negotiate with the IRS. Before you negotiate, the IRS will expect you to sell your assets to pay your bill. If you don’t have any money or assets, the IRS will negotiate and possibly lower your tax bill. If you can't pay through a payment plan and are left with no other options, fill out and submit Form 433-A and Form 656. On Form 433-A you must list your income and assets to show the IRS that you don’t have a way to pay the bill. Form 656 is used to make a reasonable offer to the IRS for your outstanding tax debt. Bargaining with the IRS is a difficult process and you should seek the advice of a lawyer or CPA as soon as you realize you can't pay your bill.

Can You Still Get a Us Passport If You Owe the IRS for Back Taxes?

As of 2012, the IRS can't stop you from getting a passport for owing back taxes, unless you fall under federal regulation 22 CFR 51.70. The Denial of Passport regulation allows the government to stop you from getting a passport if the IRS is suing you in civil court because of your delinquent taxes; the IRS has issued a subpoena for the federal government to prosecute you; or you have a federal warrant for not paying your taxes.


About the Author

Angela M. Wheeland specializes in topics related to taxation, technology, gaming and criminal law. She has contributed to several websites and serves as the lead content editor for a construction-related website. Wheeland holds an Associate of Arts in accounting and criminal justice. She has owned and operated her own income tax-preparation business since 2006.

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