You can request a payment plan from the IRS. You will still have interest charges, but you will be in compliance with tax law. The IRS does charge a user fee for setting up or reinstating an installment agreement.
If your outstanding tax balance is $10,000 or less at the time you request an installment agreement, IRS acceptance of your proposed payment plan is likely if a number of requirements are met including:
- In the prior five tax years, you must have filed all income tax returns on time, paid the income tax due, and not requested an installment agreement.
- The IRS must conclude from the information you provide that you are unable to pay the tax in full.
- You must also agree to comply with all tax laws for the duration of the installment agreement
- You must agree to pay your tax debt within three years
In Turbo Tax, this can be done in Step 2 of the File process. Indicate that you want to set up a payment plan on the How would you like to pay your federal taxes? screen
