Check out the payment options available.
Most taxpayers are able to pay the amount of tax owed for the year by the time they file their return. However, due to unforeseen circumstances, insufficient withholding and estimated payments, or simply less than perfect planning, not everyone is able to timely pay the entire amount owed on their return. Nearly every practitioner has had the experience of giving a client their tax return with a balance due, and then having the client tell them "I can't pay that right now!"
When this occurs, it's important to remember that even if your clients cannot immediately pay what they owe, they should always file on time and pay as much as they can with their tax return. By doing so, they will save money in penalties and interest. One option that we recommend is for your client to borrow the amount owed from a private source or pay with a credit card, including Visa, Master Card, Discover, and American Express.
Another option is an installment agreement (IA) with us. An IA allows your clients to make monthly payments if they are unable to pay their tax liability in full. We encourage taxpayers to make the largest monthly payment they can, because interest and applicable penalties will continue to accrue on the amount owed until paid in full, even when an IA is in place. We will also keep any future state tax refund(s) due your clients and apply it to the balance owed. We generally approve monthly IA requests if the balance owed is $25,000 or less and can be paid within 60 months; this assumes there is the ability to pay and a good compliance history. We may also approve IA requests that do not meet this criterion upon a showing of financial hardship. We generally do not file liens on these taxpayer’s accounts, although we may do so. Information regarding available payment options including IA's is available on our website. IA's can also be set up using our automated phone service at 800.689.4776 with information available in both English and Spanish.
What happens though when your clients do not pay the amount owed and cannot or do not set up an IA? In these instances and generally after we have provided the required notices, we may, among other things, file liens against property owned by your client, levy financial accounts, or issue an Earnings Withholding Order for Taxes (EWOT) to your client's employer.
An EWOT is a wage garnishment that continuously seizes at most 25 percent of a taxpayer's disposable income (from wages) until we release the order. Once an EWOT is in place, our policy is not to release it, except under limited circumstances. In cases of financial hardship, we will modify an EWOT, but cannot reduce the balance due. If we issue an EWOT in error, we will release it as soon as we verify the error. We mail garnishment release notices, but we also fax them when requested. If you think we issued your client an EWOT in error, call 800.689.4776 so we can analyze your client's account. You should also call us at this number if your client has filed for bankruptcy, either before or once an EWOT is in place.
It is always best to pay the full amount of tax due by the original due date of the return to avoid penalties and interest. However, when that is not possible, an IA with us may be a viable option under certain circumstances. Having an IA in place may help your client avoid an EWOT, lien, and/or levy.Print