Can't pay your taxes? What to do when you owe the IRS

Should I file my return even if I can't pay?

Yes. Not filing costs much more than not paying. The failure-to-file penalty is 5% of the unpaid tax for each month or part of a month the return is late, up to 25%. The failure-to-pay penalty is 0.5% per month or part of a month, also up to 25%. According to the IRS, when both penalties apply in the same month, the failure-to-file penalty is reduced by the failure-to-pay penalty for that month.

The failure-to-file penalty maxes out after five months, but the failure-to-pay penalty keeps adding up. The IRS also charges interest on what you owe, and on the penalties, until the balance is paid in full. Filing stops the failure-to-file penalty; paying, even part of it, cuts the failure-to-pay penalty and the interest.

Should I pay part of it now?

Yes. The IRS recommends paying as much as you can as soon as you can, because the failure-to-pay penalty and interest are figured on the balance that's still unpaid. Every payment you make now shrinks what keeps growing.

• From your bank account, at no cost, with IRS Direct Pay or through your IRS Online Account.
• By debit or credit card: the payment processor charges a fee.
• By check or money order.
• If you request the payment plan while preparing your return, you can enter a down payment with whatever you can pay today. If you also choose direct debit, that down payment is what the IRS withdraws from your bank account when it receives the return.

How do I request a payment plan with Form 9465?

Form 9465 is the request for an installment agreement (a payment plan). On it, you say how much you can pay each month and on what day of the month, from the 1st to the 28th. It can be e-filed together with your return. The IRS decides whether to approve it, and IRS fees and interest may apply.

• To request it with your e-filed return, what you owe can't be more than $50,000.
• Your monthly payment must be at least your balance divided by 72; in other words, the debt must be paid off in 72 months or less.
• If you owe between $25,000 and $50,000, in some cases the IRS requires the payments to be taken automatically from your bank account (direct debit).
• You must give a phone number where the IRS can reach you.
• According to the IRS, if you filed on time and have an approved payment plan, the failure-to-pay penalty drops to 0.25% per month while the plan is in effect.

What other payment options does the IRS offer?

If a monthly plan isn't what you need, the IRS has other options. In every case the IRS decides based on your situation, and interest and penalties keep running until the debt is paid.

• Short-term payment plan: up to 180 more days to pay in full, with no setup fee. You can request it online at IRS.gov or by phone.
• Offer in Compromise: an agreement with the IRS that resolves the debt by paying an agreed, reduced amount. Before the IRS will consider one, you must have filed all your tax returns and made any estimated tax payments you were required to make.
• Delaying collection: if paying would keep you from covering basic living expenses, you can ask the IRS to delay collection until your situation improves. The IRS may ask for proof of your income and expenses, and the debt keeps building interest and penalties.

What happens if I do nothing?

The debt grows every month with interest and penalties, and the IRS sends you notices by mail. According to the IRS, if you don't pay, it can file a Notice of Federal Tax Lien (a public notice that you owe) and take collection action such as a levy. If you don't pay within 10 days of getting a notice of intent to levy, the failure-to-pay penalty rises to 1% per month.

On top of that, while you owe, the IRS applies your future refunds to the debt. So even if you can't pay anything today, the most important steps are to file your return and to contact the IRS or request a plan.

How Vordana Tax handles it

With Vordana Tax you prepare your 2025 federal return in English or Spanish and e-file it with the IRS. If your return shows a balance due, you can choose a payment plan right inside the return: we prepare Form 9465 with what you choose and it's e-filed together with your return, so there's no need to call the IRS or mail anything.

Before you file, the software checks the requirements above (the $50,000 limit, the minimum payment, the phone number and the payment day) so your request isn't rejected, and your return gets a free review. For more on the form itself, see our guide "IRS payment plan: how to request one with Form 9465". If you also missed the filing deadline, see "How to file a late 2025 tax return".

Questions

Sources

• IRS: Topic no. 202, Tax payment options
• IRS: Failure to pay penalty
• IRS: Failure to file penalty
• IRS: Payment plans; installment agreements

This guide is general information about 2025 federal returns. Your situation may differ; the IRS's instructions are the final word.