How Long Does the IRS Give You to Pay Back Taxes?

Owing back taxes to the IRS can feel overwhelming You may be wondering how much time you actually have to pay off what you owe and avoid penalties. The good news is that the IRS provides flexible repayment options to help taxpayers in this situation

In this article I’ll walk through the different payment plans and timelines the IRS offers as well as what to do if you need more time. My goal is to explain your options clearly so you can make the best decision for your financial situation.

IRS Payment Plans and Timeframes

The IRS gives taxpayers different timeframes to pay back taxes, depending on the amount owed and the payment plan. Here’s an overview:

• Short-term payment plan: Up to 120 days to pay in full if you owe less than $100,000 in combined taxes, interest, and penalties.

• Long-term installment agreement Up to 72 months (6 years) to pay if you owe $50,000 or less in combined liabilities

• Custom payment plan: More than 6 years may be approved with full financial disclosure if you owe over $50,000.

Let’s look at the details of each option.

Short-Term Payment Plans

If you owe less than $100,000 to the IRS, you can request a short-term payment plan lasting up to 120 days. This gives you a 4-month extension to pay your tax debt in full.

The short-term plan involves no setup fees and can be arranged easily through the IRS website or a phone call. It’s a straightforward option for taxpayers who just need a little more time.

Long-Term Installment Agreements

For balances of $50,000 or less, the IRS offers installment agreements lasting up to 72 months (6 years). You make fixed monthly payments until your tax liability is paid off.

This option helps taxpayers who need an extended timeframe to make their tax debt more manageable. Interest and penalties continue accruing, but usually at a lower rate than credit cards or personal loans.

Custom Payment Plans

If you owe more than $50,000, the IRS may approve a custom payment plan longer than 6 years, depending on your financial situation. You’ll need to provide detailed documentation about your income, expenses, assets, and liabilities.

The IRS will evaluate your information and work with you to create a suitable long-term payment schedule for your circumstances. Expect interest and penalties to continue accumulating until your balance is paid.

What to Do If You Need More Time

Despite these payment options, you may still struggle to pay your taxes. Here are some steps to take:

• Evaluate your options – Assess whether the 120-day plan, a 72-month installment agreement, or something more customized best fits your needs.

• Contact the IRS – Explain your situation and request additional time. This shows good faith.

• Explore compromises – If facing hardship, ask about settling your debt for less through an Offer in Compromise.

• Enlist help – Tax relief companies can negotiate payment plans and represents your case.

The key is being proactive. File your returns on time, set up a payment arrangement, and communicate openly with the IRS. Avoid sticking your head in the sand, as unpaid taxes won’t disappear.

Consequences of Not Paying the IRS

It’s crucial to understand the consequences of not addressing tax debts:

• Penalties and interest will continue growing, increasing what you end up owing.

• The IRS can take enforced collection actions like wage garnishments, bank levies, and property liens.

• Once collections begin, negotiating agreements becomes harder.

• Your credit score can be severely damaged.

• Legal implications like tax fraud charges are possible in extreme cases.

Simply put, ignoring tax debts often makes the situation much worse. That’s why taking action quickly is so important, even if you can only make small payments for now.

Strategies to Manage Tax Payments

If you owe back taxes, here are some strategies to make repayment more manageable:

• Create a budget – Realistically assess how much you can devote to tax payments each month.

• Keep detailed records – Thorough financial documentation helps qualify for payment plans.

• Pay as much as possible upfront – Even small initial payments show good faith and minimize interest and penalties.

• Explore loan options – Personal loans or home equity loans may offer better rates than IRS penalties.

• Stay organized – Keep track of communications, payments, and important tax documents.

With some planning, you can tackle your tax debt systematically without unnecessary stress.

Know Your Options and Take Action

• Short-term payment plans of 120 days are available if you owe less than $100k.

• Installment agreements lasting up to 6 years are possible for balances under $50k.

• More time may be approved for higher amounts with full financial disclosure.

• Ignore tax debts at your own peril – take proactive steps to address the situation.

• Interest and penalties continue accumulating during payment plans.

While owing taxes feels daunting, options exist to help you manage repayment. Now that you know the timeframes and plans available, you can make an informed decision about the best path forward for your financial situation. The key is being proactive in reaching out to the IRS to request additional time or set up a payment arrangement.