What should taxpayers do if they cannot afford to pay their tax bill?

When taxpayers find themselves unable to pay their tax bill, exploring payment plans or entering into an Installment Agreement with the IRS is the most practical and responsible approach. The IRS offers various options for taxpayers who are experiencing financial hardship, allowing them to make smaller, manageable payments over time rather than facing the burden of a lump-sum payment. This helps prevent additional penalties and interest that can accumulate on unpaid balances.

Choosing to ignore the bill and waiting for an IRS response can lead to negative consequences, such as accruing additional penalties, interest, and potentially, tax liens. Requesting an extension to file taxes does not extend the period for payment, meaning any owed taxes are still due by the original deadline. Paying a portion and delaying the rest indefinitely may not resolve the issue and can exacerbate the situation, as the IRS expects communication and payment plans to be established for any outstanding bills.

Thus, proactively addressing the payment issue with a structured plan is essential for taxpayers facing financial difficulties.