Your unpaid taxes still accrue interest even though IRS suspends collection notices. Here are some payment options to consider

If you can’t afford to cover your full balance, you may apply for an installment agreement, a long-term monthly payment plan.

You may qualify if you owe $50,000 or less, including tax, penalties and interest, and the IRS won’t approve the plan with unfiled returns.

Of course, you’ll want to agree to an affordable monthly payment, and you’ll need to pay future taxes on time to avoid defaulting on your agreement, the Taxpayer Advocate warns.

“It’s a very quick process,” Collins said, explaining you can apply online, by phone or through a bot.

Another option, known as an offer in compromise, may allow you to settle for less than you owe. However, the IRS encourages taxpayers to explore “all other payment options” first.

“If you can show that you have financial challenges, you may be able to reduce the liability and settle it with finality to put the tax behind you so you can move forward,” Collins said.

To qualify, you need to be current on all returns, unless there’s a valid extension on file, and up-to-date with required estimated tax payments. 

You may use the Offer In Compromise Pre-Qualifier tool to gauge your eligibility and submit an application from the Offer in Compromise Booklet.

There’s also a “currently not collectible” status, where the IRS may back off from trying to receive unpaid balances for a period of time, Collins explained. 

However, if approved, your outstanding debt may still accrue penalties and interest, and the IRS may use your future refunds to cover the balance, according to the Taxpayer Advocate. And you’ll need to stay current on future taxes.

To qualify, you may need to file past due returns, along with Form 433-A, Form 433-F or Form 433-B and other documents, to show proof of your financial hardship and inability to pay.