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9 Stress-Free Options for Dealing with IRS Debt You Can’t Pay

Find relief from IRS debt stress with these effective payment alternatives.

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Updated July 2, 2025
Fact checked

Many people end up owing the IRS for various reasons, from underwithholding on a side hustle to simply miscalculating their taxes.

While whipping out a no-interest credit card might seem tempting, there are smarter ways to tackle this.

Ignoring the issue altogether is the worst approach. The good news? Several strategies can help you manage what you owe and find a solution that works for both you and the IRS.

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File your taxes with an extension

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Paying what you owe in the shortest amount of time is critical to avoid long-term interest and fees. In some situations, you can file a tax extension to have a bit more time to file your taxes. 

This can be done by filling out Form 4868, which gives you until October 15 to file your return.

However, as the IRS notes on its website, "an extension to file is not an extension to pay taxes." Taxpayers must still pay by the due date to avoid interest and penalties.

Pay over time with a long-term plan

Proxima Studio/Adobe Accountant working with US tax forms

The IRS will work with most taxpayers to set up payment plans that make it easier to pay the owed taxes in monthly payments. You may qualify if you owe under $50,000 in combined taxes, any associated fees or penalties, and interest and you filed all of your returns.

This long-term plan gives you the option of making monthly payments with a $31 set-up fee plus the cost of penalties and interest until you pay the full amount.

Pay over time with a short-term plan

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A short-term plan gives you 180 days to pay off the tax you owe. If you owe less than $100,000 in taxes, penalties, and interest to the IRS, you may qualify for this payment plan option. You can apply for this on the IRS website.

This short-term plan doesn't require a setup fee. You will pay accrued penalties and interest on the amount until it is paid off in full. In this plan, you'll pay the amount you owe directly from your checking or savings account by check, money order, or credit or debit card.

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Request an Offer in Compromise

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If you owe a significant amount of money but don't have assets, you may wish to pursue an Offer in Compromise. It allows you to offer a lower amount than you owe to the IRS, which then accepts it as payment in full.

It's not likely the IRS will consider this option if it believes you can make payment in full for any reason, even if that's through monthly payments over time. 

If you own assets, like a home, savings account, or investment property, the IRS may not agree to an offer in compromise. 

Instead, they will ask you to liquidate those assets. Also, note you'll need to be current on your tax return filings and estimated tax payments going forward.

Ask to delay collection

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What if you cannot pay anything right now? If you're ill or not working, it may be possible to ask the IRS to delay collections. This is a temporary break in their effort to collect your debt. In this method, the IRS deems the account as not collectible.

The debt isn't discharged, and you will need to pay it when you can. The IRS may also take action to place a lien against your property, such as your home, as long as you are not making payments. 

If you're facing financial difficulties right now for any reason, this option may help to give you a bit of a break if the IRS approves it.

Request for a penalty abatement

Andrey Popov/Adobe accountant calculating tax

If this is the first time you're behind on your tax debt, you may be able to request a penalty abatement. This doesn't discharge the debt you owe, but it may allow you to reduce the fines associated with the late tax payment.

This type of fee-reduction method is only available to those who may have fees from the previous three years and are encountering penalties for the first time. 

You also have to have filed your tax returns or an extension and set up a method (like a payment plan) to pay your tax bill.

Ask for other penalty relief

Syda Productions/Adobe woman in glasses with papers and calculator

If you've been the victim of a natural disaster, you may be eligible for a penalty relief. 

The IRS may offer relief for failure to file or pay on time for these situations: fires, natural disasters, or civil disturbances; inability to get records; death, serious illness, or unavoidable absence of the taxpayer; or a system issue that delayed electronic filing or payment.

To apply for penalty relief for reasonable cause, you will need to explain the situation that prevented you from filing or paying on time and provide documentation for your request.

Dispute the amount you owe

Nina/peopleimages.com/Adobe tax time

If you received a notice of taxes owed and penalties on top of it that you were not expecting, you may want to consider disputing it if you can show that the required payment is inaccurate.

To do this, you'll need to make an appointment with a local IRS office, contact them over the phone, or work with your tax accountant to communicate the error and rectify the concern. If you're right, the IRS will remove any taxes owed beyond what is legally allowable.

File for tax relief if your spouse made an error

JohnKwan/Adobe filing the income tax return

There are two types of relief for spouses when there is an error on a joint return: an innocent or injured spouse.

If your spouse made an error when filing your joint tax return that incurs additional taxes, you may file for tax relief as an innocent spouse.

If your tax refund was lowered to pay your spouse's debts, you may be eligible for relief as an injured spouse.

Bottom line

Kimberly Reinick/Adobe dollar bills over tax form

If you can't pay your taxes on time, there are several key things to remember. 

First, you need to communicate with the IRS and set up a way to get caught up this year. Then, you'll need to work with a tax professional to ensure the same thing doesn't happen next year.

If your tax debt is just one of your debts, you should find ways to reduce your overall debt, whether credit cards, car loans, or personal loans.

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