Thursday, March 22, 2018

Taxpayers who owe taxes have multiple options

Issue Number:    IR-2018-57
Inside This Issue



Tax Time Guide: Taxpayers who owe taxes have multiple options

WASHINGTON — The Internal Revenue Service today reminded taxpayers that there are several easy options to pay taxes electronically. For those unable to pay on time, the IRS offers a variety of ways to take care of a tax liability.

This is the fifth in a series of nine IRS news releases called the Tax Time Guide, designed to help taxpayers navigate common tax issues.

This year’s tax-filing deadline is April 17. Taxpayers who owe taxes can choose among the following quick and easy electronic payment options:


Electronic Funds Withdrawal (EFW). This option allows taxpayers to e-file and pay from their bank account when using tax preparation software or a tax professional. EFW is only available when electronically filing a tax return.

Direct Pay. Available at IRS.gov/directpay, this free online tool allows taxpayers to securely pay their taxes directly from checking or savings accounts without any fees or preregistration. Taxpayers can schedule payments up to 30 days in advance. Those using the tool will receive immediate confirmation when they submit their payment. Taxpayers can opt in to receive email notifications about their payments each time they use Direct Pay.


Credit or Debit Card. Pay online, by phone or with a mobile device through any of the authorized debit and credit card processors. The processor charges a fee. The IRS doesn’t receive or charge any fees for payments made with a debit or credit card. Go to https://www.irs.gov/payments for authorized card processors and phone numbers.

IRS2Go. The IRS2Go mobile app is free and offers taxpayers the option to make a payment with Direct Pay for free or by debit or credit card through an approved payment processor for a fee. Download IRS2Go free from Google Play, the Apple App Store or the Amazon App Store.

Electronic Federal Tax Payment System. This free service gives taxpayers a safe and convenient way to pay individual and business taxes by phone or online. To enroll and for more information, call 800-555-4477, or visit eftps.gov. Both business and individual taxpayers can opt in to receive email notifications about their payments.

Cash. Taxpayers paying with cash can use the PayNearMe option. Payments are limited to $1,000 per day, and a $3.99 fee applies to each payment. The IRS urges taxpayers choosing this option to start early, because PayNearMe involves a four-step process. Initiating a payment well ahead of the tax deadline will help taxpayers avoid interest and penalty charges. The IRS offers this option in cooperation with OfficialPayments.com/fed and participating 7-Eleven stores in 34 states. Details, including answers to frequently asked questions, are at IRS.gov/paywithcash.

Same-Day Wire Payments. Taxpayers may be able to do a same-day wire transfer from their financial institution. Contact the financial institution for availability, cost and cut-off times. Download and complete the Same-Day Taxpayer Worksheet and take it to the desired financial institution. If paying for more than one tax form or period, complete a separate worksheet for each payment.   


Taxpayers must file their 2017 tax returns by April 17, 2018, or request a six-month extension. Extensions can be requested using Free File, by filing Form 4868 or by paying all or part of  the estimated income tax due and indicating that the payment is for an extension using Direct Pay, the Electronic Federal Tax Payment System (EFTPS) or a credit or debit card. Taxpayers do not have to file a separate extension form and they receive a confirmation number for their records.

Taxpayers who choose to pay by check or money order should make the payment out to the “United States Treasury.” To help ensure that the payment gets credited promptly, also enclose a Form 1040-V payment voucher. Also, print on the front of the check or money order: “2017 Form 1040”; name; address; daytime phone number; and Social Security number.

Taxpayers can go to IRS.gov/account to securely access information about their federal tax account. They can view the amount they owe, pay online or set up an online payment agreement; access their tax records online; review the past 18 months of payment history; and view key tax return information for the current year as filed. Visit IRS.gov/secureaccess to review the required identity authentication process.

Taxpayers who owe, but cannot pay the balance in full, do have options. Often, they qualify for one of several relief programs, including:

Payment Plans, Installment Agreements -- Most individuals can set up a payment plan, including an installment agreement, with the IRS using the Online Payment Agreement application in a matter of minutes. If you owe $50,000 or less in combined tax, penalties and interest you may qualify for a long-term payment plan of up to 72 months. If you owe less than $100,000 in combined tax, penalties and interest, you may qualify for a short-term payment plan of up to 120 days. With the Online Payment Agreement, no paperwork is required, there is no need to call, write or visit the IRS. Alternatively, for a long-term payment plan, taxpayers can request an installment agreement by filing Form 9465. Download the form from IRS.gov and mail it along with a tax return, IRS bill or notice.

Offer in Compromise -- Some taxpayers may qualify for an offer in compromise. This is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. To help determine eligibility, individual taxpayers may use the Offer in Compromise Pre-Qualifier, a free online tool available on IRS.gov.

Taxpayers can find answers to tax questions, tax forms and instructions and easy-to-use tools online at IRS.gov 24 hours a day, seven days a week. No appointments needed and no waiting on hold.     

Monday, January 22, 2018

Updated 2018 Withholding Tables Now Available; Taxpayers Could See Paycheck Changes by February


IR-2018-05, Jan. 11, 2018

WASHINGTON — The Internal Revenue Service today released Notice 1036, which updates the income-tax withholding tables for 2018 reflecting changes made by the tax reform legislation enacted last month. This is the first in a series of steps that IRS will take to help improve the accuracy of withholding following major changes made by the new tax law.

The updated withholding information, posted today on IRS.gov, shows the new rates for employers to use during 2018. Employers should begin using the 2018 withholding tables as soon as possible, but not later than Feb. 15, 2018. They should continue to use the 2017 withholding tables until implementing the 2018 withholding tables.

Many employees will begin to see increases in their paychecks to reflect the new law in February. The time it will take for employees to see the changes in their paychecks will vary depending on how quickly the new tables are implemented by their employers and how often they are paid — generally weekly, biweekly or monthly.

The new withholding tables are designed to work with the Forms W-4 that workers have already filed with their employers to claim withholding allowances. This will minimize burden on taxpayers and employers. Employees do not have to do anything at this time.

“The IRS appreciates the help from the payroll community working with us on these important changes,” said Acting IRS Commissioner David Kautter. “Payroll withholding can be complicated, and the needs of taxpayers vary based on their personal financial situation. In the weeks ahead, the IRS will be providing more information to help people understand and review these changes."

The new law makes a number of changes for 2018 that affect individual taxpayers. The new tables reflect the increase in the standard deduction, repeal of personal exemptions and changes in tax rates and brackets.

For people with simpler tax situations, the new tables are designed to produce the correct amount of tax withholding. The revisions are also aimed at avoiding over- and under-withholding of tax as much as possible.
To help people determine their withholding, the IRS is revising the withholding tax calculator on IRS.gov. The IRS anticipates this calculator should be available by the end of February. Taxpayers are encouraged to use the calculator to adjust their withholding once it is released.

The IRS is also working on revising the Form W-4. Form W-4 and the revised calculator will reflect additional changes in the new law, such as changes in available itemized deductions, increases in the child tax credit, the new dependent credit and repeal of dependent exemptions.

The calculator and new Form W-4 can be used by employees who wish to update their withholding in response to the new law or changes in their personal circumstances in 2018, and by workers starting a new job. Until a new Form W-4 is issued, employees and employers should continue to use the 2017 Form W-4.

In addition, the IRS will help educate taxpayers about the new withholding guidelines and the calculator. The effort will be designed to help workers ensure that they are not having too much or too little withholding taken out of their pay.

For 2019, the IRS anticipates making further changes involving withholding. The IRS will work with the business and payroll community to encourage workers to file new Forms W-4 next year and share information on changes in the new tax law that impact withholding.

More information is available in the Withholding Tables Frequently Asked Questions.