In a News Release (IR 2020-48), the IRS has provided a list of payment options available to taxpayers who need to make a tax payment or who owe taxes they can’t pay. 

Taxpayers who owe taxes

Taxpayers who owe taxes can choose among the following payment options:

Electronic funds withdrawal (EFW)

Taxpayers who electronically file their tax returns using tax preparation software or a tax professional can pay any taxes they owe from their bank account using EFW. EFW is free and available when electronically filing a tax return with an amount due.

IRS Direct Pay

IRS Direct Pay allows taxpayers to pay their federal taxes, separately from filing their return, directly from their bank account, without any fees or preregistration. Taxpayers can schedule payments up to 30 days in advance and, after submitting a payment, will receive immediate confirmation of that payment.

Credit, debit cards or digital wallet

Taxpayers can pay their taxes online, by phone or with a mobile device through an IRS authorized payment processor (APP). A list of IRS APPs can be found here. APPs charge a processing fee, and taxpayers may only use APPs to make tax payments twice per year. 

IRS2Go

The IRS2Go mobile app can be used to make tax payments for free through IRS Direct Pay or by debit card, credit card or digital wallet for a fee through an APP. The IRS2Go app can be downloaded for free from the Amazon App store, Apple App store, or Google Play.

Electronic Federal Tax Payment System (EFTPS)

EFTPS is a free service that allows taxpayers to pay individual and business taxes by phone or online. Taxpayers must enroll to use EFTPS. Taxpayers interested in using EFTPS should visit eftps.gov.

Cash

Taxpayers have the option of paying their taxes in cash using the PayNearMe option, which is available at participating retail stores. Since it may take five to seven business days to process a PayNearMe payment, taxpayers using PayNearMe need to initiate their payments well before the tax deadline to avoid late-payment interest and penalty charges. Also, PayNearMe tax payments are limited to $1,000 per day, and a $3.99 fee is imposed on each payment. Taxpayers interested in this option will find details, including frequently asked questions, at IRS.gov/paywithcash. 

Checks and money orders

Taxpayers may pay their taxes using checks and money orders made out to the “U.S. Treasury.” Taxpayers using this option should write their Social Security Number (SSN), daytime phone number, and “2019 Form 1040” on the check or money order and enclose Form 1040-V, Payment Voucher, with their payment. 

Extension payments

The 2019 tax filing deadline for most individual taxpayers has been extended to July 15, 2020. Individual taxpayers may request an automatic 3-month extension to file their returns; however, any 2019 taxes owed are still due on July 15, 2020. According to the IRS, individual taxpayers should file their returns or request an extension, even if they can’t pay the taxes due, to avoid the higher penalties for not filing at all.

Individual taxpayers request an automatic 3-month extension to file their return by (1) completing and filing Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, or (2) paying all or part of any income tax due using IRS Direct Pay, EFTPS or a credit or debit card through an APP and indicating that the payment is for Form 4868. 

Individual taxpayers who want to make an extension payment by check or money order should make the check or money order out to the “United States Treasury,” write their SSN, daytime phone number, and “2019 Form 4868” on the check or money order, enclose the check or money order with Form 4868 and mail to the IRS at the address listed on page 4 of the Form 4868 instructions. 

Taxpayers who can’t pay taxes they owe

Under §6159, the IRS may enter into written agreements with any taxpayer for the payment of tax in installments (installment agreements) to the extent IRS determines that doing so will facilitate the full or partial collection of the tax.

The IRS offers taxpayers who owe taxes but can’t pay the balance in full several different types of installment agreements, including: a short-term installment agreement of up to 120 days to pay in full or a long-term monthly installment agreement. 

The amount of tax owed and the individual taxpayer’s tax filing compliance determines which installment agreement options may be available to the taxpayer. Generally, taxpayers who have filed all required returns and owe $50,000 or less in combined tax, penalties, and interest may use the IRS Online Payment Agreement Tool to set up an installment agreement. Set up fees may apply for some types of installment agreements.

Some taxpayers who can’t pay the taxes they owe may qualify for an Offer in Compromise (OIC). An OIC is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed (§7122). Taxpayers should use the Offer-in-Compromise Pre-Qualifier Tool to determine if they are eligible for an OIC.

The IRS also has encouraged individual taxpayers to create an IRS Tax Account where they can view any tax amounts they may owe, make payments online, set up an installment agreement, access their tax records online, review their payment history, and view current year tax return information.

(This is Blog Post #838)