You Filed Your Tax Return But Didn’t Pay: What Happens Next?
If you filed your tax return but couldn't afford to pay the balance due, you did the right thing by filing on time.
Now comes the next step.
About two months after tax season, many taxpayers begin receiving IRS balance-due notices in the mail. The most common is Notice CP14, which tells you how much you owe, including penalties and interest. For many people, opening that letter can be stressful. But receiving a balance-due notice is often the best time to take action.
First, don't ignore the notice. The IRS sends these notices because a tax return was filed showing a balance due that was not paid in full. If no action is taken, penalties and interest continue to accumulate, and the IRS collection process can become more serious.
Installment Agreements: The Most Common Solution
For many taxpayers, an IRS installment agreement is the simplest answer. An installment agreement allows you to make monthly payments over time rather than paying the entire balance immediately. Even if you cannot pay the full amount today, paying something and establishing a payment plan is often far better than doing nothing.
What If You Truly Can't Afford Payments?
If your financial situation is severe, the IRS has other programs that may help.
Currently Not Collectible Status
Taxpayers experiencing genuine financial hardship may qualify for a temporary suspension of collection activity. This doesn't erase the debt, but it can provide breathing room while you get back on your feet.
Offer in Compromise
In some situations, taxpayers may be able to settle their tax debt for less than the full amount owed. While not everyone qualifies, it can be a valuable option for taxpayers facing long-term financial hardship.
Make Sure the Notice Is Correct
Before paying, review the notice carefully. Occasionally taxpayers receive a balance-due notice after they have already paid, particularly when payments are still being processed or posted to the IRS account.
The Bottom Line
Filing your return was the first step. Now it's time to deal with the balance due.
The good news is that the IRS would much rather work with taxpayers who communicate and make arrangements than with those who ignore the problem.
If you've received an IRS balance-due notice and aren't sure whether an installment agreement, Offer in Compromise, or another relief option is right for you, contact me for a free consultation. Together we can review your situation and determine the best path forward.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.