Can't pay your taxes? Experts say you have options

April 9, 2013 8:38:55 PM PDT
Just in time for tax season, there longer wait times for those seeking help from the IRS. Budget cuts are blamed for the increase in wait time.

Right now, it takes about 18 minutes to get a person on the line at the IRS. Last year, it was 13 minutes on hold.

One reason people call is to get options when they can't pay their taxes. We have some answers for those callers.

It happens to millions of Americans. In fact, at the Neighborhood Tax Center most of the people seeking free help owe money to the IRS and can't pay.

But there are some things you can do about it.

Getting free help filing taxes is in high demand as April 15 nears. The experts at the Neighborhood Tax Center say at this point in the tax season they see a lot of filers with a common problem.

"Generally the people who are waiting until the last minute are those who owe taxes," Neighborhood Tax Center's Elizabeth Ferrer said.

Ferrer says in many cases, those who owe cannot pay.

"What we tell everyone is that the IRS is very good about arranging monthly payments. They will charge interest, it is not at the same rate as the credit card," she said.

Ferrer says taxpayers who can not pay should call the IRS themselves to set up payments.

"If you want to pay $20 the rest of your life, the IRS is willing to work with you on that," she said.

Taxpayers can also file an extension giving them more time to get a return in, but extensions do not delay payment responsibilities.

"The biggest mistake I see people making is they ignore the problem," Houston CPA Bob Martin said.

Martin says for those wanting to make installment payments, Form 9465 is their friend. He adds there are other options, too.

"They have offers of compromise, where they may be willing to reduce the amount," Martin said.

Some taxpayers could delay their tax payment if they have fallen on hard times.

"It is an undue hardship request, where if you have extenuating circumstances you may be able to get a postponement," Martin said.

One thing to remember, tax experts say the IRS very rarely forgives tax debt. They do not negotiate "tax settlements." So it's typically not worth paying a firm to try to negotiate a settlement with the IRS.

It's cheaper and more effective if you just deal with the IRS directly.

Find Jeff on Facebook at ABC13JeffEhling or on Twitter at @jeffehlingabc13