Do you owe taxes but don’t have the money? Are you afraid of the tax trouble it will cause? Not sure what to do about this tax problem? Before you panic and worry yourself to death, know there are options available to address this tax situation. Be forewarned, not choosing an option and avoiding the tax issue could result in the IRS filing a Federal Tax Lein against you.

Here are 10 tax tips from the IRS for taxpayers who can’t pay taxes in full:

1. The IRS strongly encourage taxpayers to pay as much of the tax as possible. This will minimize the tax liabilities because the amount of interest and penalties owed will be less.
2. Each taxpayer’s situation is different, but some may qualify for a tax extension, a temporary delay, a payment (installment) agreement or an Offer in Compromise to satisfy the tax debt.
3. Taxpayers who need more time to pay the full amount should contact the IRS immediately about the tax problem using the phone number or mailing address printed on your tax bill.
4. A good tax tip is to consider getting a loan from a bank or finance company. The interest and fees will be lower than the interest and tax penalties imposed by the Internal Revenue Service.
5. Taxpayers who can’t pay the full amount of the tax could qualify for additional time, up to 120 days, to pay the tax debt in full. The advantage of this tax payment arrangement is that there is no fee and minimizes the interest and tax penalties.
6. Taxpayers who can’t afford to pay their taxes within 120 days should consider an installment agreement. There is a one-time fee of $105, an additional fee of $53 for direct deposit.
7. To apply for an installment agreement you can use the Online Payment Agreement application available on the IRS website; file a Form 9465, Installment Agreement Request; or call the IRS at the telephone number shown on your bill.
8. Even if you set up an installment agreement, the IRS may still file a Notice of Federal Tax Lein to secure the government’s interest until you make the final payment.
9. Taxpayers with serious financial hardships and limited income may be able to settle their tax liabilities for less than the full amount owed through an Offer in Compromise with the IRS. But be aware, if the IRS believes you could settle your tax debt in a lump sum or with payments, chances are you won’t qualify.
10. The top tax tip for taxpayers who can’t pay the full amount of taxes is to always respond to an IRS notice. If you disregard or fail to respond to the IRS notice, and do not make payments arrangements to pay your tax liabilities, the IRS is entitled to take collection action.

Taxpayers who can’t pay their taxes in full should heed the tax tips outlined above. The worst action a taxpayer could make is to avoid the issue altogether. Even though it’s a hard thing to do, call the IRS and arrange a tax payment arrangement to pay off your tax liabilities.

More information on the collection process is available at http://www.irs.gov.

Source: irs.gov