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- Can't afford your tax bill in today's economy? You have options.</p>
<p>Melanie LockertJuly 8, 2025 at 10:24 PM</p>
<p>There are a variety of tax relief solutions worth exploring for taxpayers struggling to pay their bill in today's economy. / Credit: Getty Images/iStockphoto</p>
<p>Whether you underwithheld taxes on your paycheck or didn't make your estimated tax payments, you might have a surprise bill from the IRS. So when you see how much you owe, you might realize you can't afford to pay your tax bill in full.</p>
<p>Over the past few years, the cost of living has gone up due to persistent inflation. While costs have increased, wages have fallen flat, making it difficult to pay for unexpected expenses. While you might want to avoid the issue altogether, taking action is key.</p>
<p>If you owe back taxes, you have various options to get into good standing. Below, we'll examine how to pay a tax bill you can't afford and what you can do to minimize or avoid interest, penalties, and more serious IRS collection actions, even in today's hard-to-navigate economic climate.</p>
<p>Get help with your outstanding tax bill here now.</p>
<p>How to pay your tax bill in today's economy</p>
<p>It's a stressful situation if you owe the IRS taxes and can't foot the bill. But the problems start to compound if you ignore the issue.</p>
<p>"The IRS is required by law to send a series of notices, and they typically are 30 days apart…But if those notices do go ignored, wage garnishments are pretty common, and then levies on bank accounts," says Rachel Needham Gillilan, CPA, manager of dispute services at Red Bike Advisors, an accounting firm.</p>
<p>Taking action can help prevent some of the more serious IRS collection actions. If you can't afford your tax bill right now, there are several tax relief options to consider:</p>
<p>IRS payment plans</p>
<p>You may not be able to cover your tax bill in full. But breaking it down into monthly payments for several years can help a lot. You can look into an IRS payment plan to make paying your tax liability more manageable.</p>
<p>"If you owe $50,000 or less, you can set up an installment plan with the IRS and repay that liability over 72 months," says Christian Rivera, CPA and founder of The Ecommerce Accountants, an accounting service.</p>
<p>If you're able to pay off your tax liability in a shorter timeframe and owe less than $100,000, you can look into a short-term IRS payment plan. This gives you six months or 180 days to pay your tax bill.</p>
<p>Aside from paying your back taxes faster, a short-term IRS payment plan can help you avoid setup fees. If you choose a long-term payment plan, setup fees can range from $22 to $178. Costs vary based on whether you apply online or by phone, mail, or in person, as well as whether you pay with direct debit or not.</p>
<p>Explore your IRS payment plan options in further detail here.</p>
<p>Offer in Compromise</p>
<p>An Offer in Compromise can seem like a great solution. It's a way to resolve your tax debt and settle for a lower amount than you owe. But you have to qualify and eligibility can be strict. You must show that paying your back taxes would cause financial hardship. As part of determining your eligibility, the IRS reviews your:</p>
<p>Ability to payIncomeExpensesAsset equity</p>
<p>If you have assets available that you can liquidate to pay your tax liability, you're unlikely to qualify for an Offer in Compromise.</p>
<p>"My gut tells me that Offer in Compromise is truly centered around people that are in financial distress or are low earners that genuinely can't afford to pay their entire liability down either through a payment plan or just in general," says Rivera.</p>
<p>You must be current with your tax returns and not be in the middle of declaring bankruptcy. To help you determine your eligibility, use the Offer in Compromise Pre-Qualifier Tool.</p>
<p>Currently Not Collectible status</p>
<p>If paying your tax bill isn't a possibility due to your financial situation, the IRS may agree to put your account in Currently Not Collectible status. Your debt doesn't vanish and you continue to rack up interest and penalties. It's also not a settlement like an Offer in Compromise. It's only a delay, stating that based on your finances at the time, your account is currently not collectible by the IRS.</p>
<p>"Currently not collectible is sometimes an option just depending on the unique circumstances of the taxpayer," says Gillilan. But in order to qualify, there are some pretty strong thresholds to prove that the person is experiencing severe financial hardship.</p>
<p>To qualify, you typically need to provide financial data like your income, expenses, and assets. Additionally, the IRS will review your ability to pay.</p>
<p>"You can stay in Currently Not Collectible status for 10 years or until your tax debt is written off but not everyone gets that privilege. The IRS will review your income annually, and if your finances improve, they will withdraw the currently non-collectible status and start collecting again," says Stephen A. Weisberg, principal attorney and founder at The W Tax Group, a nationwide tax defense company.</p>
<p>Penalty abatement</p>
<p>If you owe back taxes, it's not just the amount you have to worry about. You'll also face interest and penalties, which can hike up your total tax debt quickly. You could face either a failure-to-file or a failure-to-pay penalty, or both. However, if it's your first time, you may qualify for penalty relief through an administrative waiver.</p>
<p>"First-time penalty abatement is the most common that we see. I kind of equate it to a get out of jail free card, where it's like the first time you goof, you can get penalties abated," says Rivera.</p>
<p>You can review your IRS notice and follow the instructions to request First Time Abate relief.</p>
<p>The bottom line</p>
<p>If you owe back taxes and can't afford to pay them in this economy, you have multiple options for tax relief. The most important part is taking action. Doing so can help you avoid serious IRS collection actions, such as wage garnishment, a lien, or a levy on your home. While it can seem scary at first, it's manageable and may not be as costly as you think.</p>
<p>Research your options and the eligibility requirements. Continue to file tax returns on time and get on an approved payment plan to manage your tax debt. You can also get IRS tax debt help from from a vetted professional.</p>
<p>"If you owe more than $10,000, have unfiled tax returns, own a business, or have received collection notices from the IRS, you should seek help from a tax professional," says Weisberg.</p>
<p>Be cautious of tax relief companies that may make unrealistic promises like tax forgiveness. If you decide to pursue tax relief services, check reviews on the Better Business Bureau (BBB) and make sure you're working with licensed tax professionals.</p>
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