If you ignore the tax bill you owe, the IRS may eventually force you to pay using several tools, such as federal tax liens, levies, and wage garnishments. And that is in addition to the penalties and interest that will accrue. The IRS offers options for people in difficult situations, such as the status of currently untaxable and the offer of commitment. For the IRS, an economic difficulty is more than not having the funds to go out to dinner and buy new clothes; financial difficulties should show that the taxpayer is having difficulty paying necessary and reasonable living expenses.
If you ignore this letter, the IRS can file a federal tax lien notice to alert creditors that the IRS has a right to your personal property, real estate, or other assets. The only way to have more time to pay the taxes due is to submit a request for an extension due to economic difficulties from the IRS using Form 1127, since the usual tax extension on Form 4868 only gives you more time to file the request. Once the taxpayer is sure that they are eligible to request an extension of the payment for economic hardship from the IRS, it is important to know that the extension process is the next step. Once eligibility is determined, taxpayers may find the IRS FileIT Form 433-A useful, as it contains the necessary information that the IRS will look for.
If you're having financial difficulties and owe taxes, consider taking the steps below to work with the IRS to settle your debt. The IRS doesn't always grant a tax extension for economic hardship, but that doesn't mean the taxpayer should give up minimizing debts, charges, and tax penalties. The IRS rarely grants payment extensions, and you will only be granted one if you can demonstrate undue hardship.
