Installment Agreement

• If you are unable to make a full tax payment by the return's due date, you can request an installment plan by completing IRS Form 9465. An installment agreement allows you to make small monthly payments until you pay the tax in full. However, the installment period may not exceed 10 years. To take advantage of the payment plan, you must be current on all prior tax filings. Aside from smaller tax payments, the IRS does not have the authority to levy on property you own during the application period and the period the installment agreement is in effect.
  
  

Temporary Delay

• Taxpayers who are unable to meet current tax liabilities can request the IRS to temporarily delay collection activities. If the IRS confirms that you are temporarily unable to pay, it will cease all collection activities until it deems you are financially able to make payments. However, during this time, the IRS can levy personal property to protect its claim against you. You are also responsible for the interest and penalties that accrue during the temporary delay.
  
  

Offer in Compromise

• The IRS has the authority to reduce the amount of tax, interest and penalties you must pay if it accepts the offer in compromise you submit. A reduction in tax liability is only available to taxpayers who are unable to make even small payments under an installment agreement. Common circumstances that warrant an IRS approval of the offer is if there is some doubt as to the actual tax liability, the IRS is not confident it can ever collect the full amount due, you offer a fractional lump-sum payment to fully satisfy the tax debt or you agree to make a full partial payment within two years. To submit an offer, you must complete IRS Form 656, provide full financial disclosure and enclose the application fee of $150.
  
  

Review Prior Returns

• If you have a tax liability for the current year, you can reduce it by the amount of tax refunds you are due. The IRS allows you to amend a tax return within three years of filing the original. In some situations, it may behoove you to review the previous three returns to determine their accuracy and to ensure you did not miss any tax deductions. If you find an opportunity for a tax deduction, you can file the amended return and request that the refund be applied to the current tax year.
  
  

Credit Cards

• As a last resort, taxpayers can use a personal credit card to pay outstanding tax liabilities. However, prior to making a credit payment, you should compare the potential cost of IRS interest and penalties that will accrue if you do not pay with the interest rate you will pay on the credit card.