Resources: Guides

State and Federal Payment Relief Options

Explore different options to set up a payment plan or potentially reduce your tax debt with the Internal Revenue Service (IRS) or Franchise Tax Board (FTB).
Updated 05/08/2024
Share:
Share

When it comes to facing tax penalties and payment challenges, it is important to communicate with the IRS or California Franchise Tax Board (FTB) immediately if the amount owed is a hardship, and explore different options to set up a payment plan or potentially reduce your tax debt. There are a variety of options, not all listed here, but that can be found on the IRS and FTB websites linked at the end of this article. Below are some frequently asked questions with important information you should know.

Please note that setting up a payment plan is a separate process and assistance is not provided through MyFreeTaxes.org or through our in-person and virtual Volunteer Income Tax Assistance (VITA) free tax preparation sites.

The IRS and FTB both charge a penalty for not filing by the tax deadline if you owe taxes. They also begin to charge interest on any unpaid taxes starting the day after the filing deadline. By filing an extension, you will avoid a penalty for not filing on time, but please note that interest will still accumulate for any unpaid taxes owed. To keep interest fees down on unpaid taxes, try to pay as much of the amount due as possible before the tax deadline. 

If you expect a refund, there is no penalty for filing late and an extension is not required. However, we still recommend filing as soon as possible, as there is a statute of limitations of how long you can wait to claim a refund. The filing deadline for individuals who are owed a refund have three years after the filing deadline of the specific tax year to claim their refund. This means the filing deadline for tax year 2023 will be April 15, 2027. This also means that if you are a CA tax filer and did not file your 2020 tax return, you have until May 17, 2024, to file and claim your refund; this deadline also applies to any missing 1st and 2nd stimulus payments you were eligible for and have yet to claim. 

The filing deadline, usually around April 15, is the deadline to file taxes and pay if you owe the IRS or FTB. For Californians that owe taxes for tax year 2023, the deadline was April 15, 2024, unless you reside in San Diego County; San Diego County residents were granted an automatic tax extension until June 17, 2024.

There are several factors that affect whether you owe taxes or not, including:

  • Incorrect withholding amounts:
    If you underpaid taxes on the income you made, this means you will owe a higher amount of taxes at the end of the year. If you overpaid taxes on the income you made by withholding a higher amount from your income, then you will receive a refund.
  • Eligibility for tax credits and deductions
    If you are eligible for tax deductions or nonrefundable tax credits, these will lower your tax bill up to $0. If you are eligible for refundable tax credits, these are tax credits that can be cashed out if they surpass the amount of taxes owed, then you would receive a refund.

If you are unsure about how to fill out your withholding form (Form W-4), use the Withholding Calculator on the IRS website here. 

For individuals who are unable to pay their tax liability in full, the IRS offers a short-term (180 days or less) and long-term (monthly installments) payment plans; the FTB offers a monthly installment agreement (up to three to five years maximum).

TypePayment Plan OptionsEligibilityHow to Apply
IRS Short-term Payment Plan
  • Amount owed to be paid in 180 days or less
  • $0 set up fee
  • Plus accrued penalties and interest until the balance is paid in full
  • Fees apply when paying by card

 

  • To be eligible, your combined tax, penalties, and interest must be less than $100,000.

 

 

 

 

 

IRS Long-term Payment Plan
  • Amount owed to be pain in more than 180 days (monthly payments)
  • Setup fees vary
  • Fees apply when paying by card.

 

 

 

 

 

 

 

 

 

 

 

 

  • To be eligible, your combined tax, penalties, and interest must be less than $50,000.

 

 

 

 

 

 

 

 

 

 

 

 

Can apply online, by phone, mail or in person.

  • Option 1: Pay through Direct Debit
    • Apply online: $31 setup fee
    • Apply by phone, mail, or in-person:$107 setup fee
    • Set up fee can be waived if you meet certain income requirements
  • Option 2: Monthly payments through Direct Pay, using the Electronic Federal Tax Payment System (EFTPS) (enrollment required), or payment by check, money order or debit/credit card
    • Apply online: $130 setup fee
    • Apply by phone, mail, or in-person: $225 setup fee
    • $43 set up fee for tax filers who meet certain income requirements (this set up fee can also be reimbursed if certain conditions are met)

Phone: 800-829-1040
Mail: Form and instructions are here.

 

FTB Installment Agreement
  • Up to 3–5 years maximum
  • Up to 90 days to process the request (while waiting for approval, the FTB recommends continuing payments. Penalties and interest accrue until the balance is paid in full).
  • $34 setup fee (if approved)

 

 

 

 

  • If the amount owed is less than $25,000 and can be paid in 60 months or less
  • If you have filed income tax returns the last 5 years

 

 

 

 

 

 

Can apply online, by phone, mail or in person.

  • You cannot apply online if you have a:
    • Current installment agreement with the FTB
    • Wage garnishment (earnings withholding order)
    • Bank levy (order to withhold)
    • Other collection orders (warrant, continuous order to withhold)

Phone: 800-689-4776
Mail: Form and instructions are here.

 


To apply for a payment plan with the IRS (federal taxes) click here. To apply for a payment with the Franchise Tax Board (California) click here.

Make Payments to the IRS

There are multiple options when it comes to paying taxes if you owe:

  • Online: You may submit a payment when filing an extension or taxes online with your complete bank account and bank routing number. Another fast and secure way to make any payment is on the IRS website at www.irs.gov/payments.
  • Phone: You may also call the IRS general line to make a payment through the automated phone system at 1-800-829-1040.
  • Mail: You may make payments by mail using a personal check or money order. It is important to include relevant notes with your check or money order payment—such as which tax year you would like the payment applied to (for example, “Tax Year 2023”) and your social security number or ITIN on the check memo. Checks written to the IRS are written to the Department of Treasury.

Here is a sample check with relevant information you should include:

 

The address where you may send IRS payments:

Internal Revenue Service
P.O. Box 802501
Cincinnati, OH 45280-2501

Make Payments to the Franchise Tax Board

When it comes to paying the Franchise Tax Board, the process is similar. You can pay over the phone, online, or by mailing a check.

  • Online: To pay online, visit: https://www.ftb.ca.gov/pay.
  • Phone: To make any payment or set up a payment plan with the Franchise Tax Board via phone, you can call 1 (800) 852-5711.
  • Mail: To mail your payment to the Franchise Tax Board, send a check written out to the Franchise Tax Board to the following mailing address.

    Franchise Tax Board
    P.O. Box 942867
    Sacramento, CA 94267-0001

If your tax debt is more than what you can handle, the IRS and FTB offer additional relief options. To read more about options offered through the IRS, click here. To read more about options offered through the FTB, click here.

If you need additional support with navigating your federal tax debt relief options, you can also contact the Taxpayer Advocate Service (TAS) or a Low Income Taxpayer Clinic (LITC). Both the TAS and LITCs are independent of the IRS, and provide additional support to taxpayers.

The Taxpayer Advocate Service (TAS) can provide assistance if your tax issue is causing financial hardship, if you have attempted to resolve the problem with the IRS without success, or if you believe that an IRS system, process, or procedure is not functioning correctly. LITCs can assist you in navigating IRS notices, audits, appeals, tax collection issues, and other tax disputes at no cost or for a small fee.

For more information about the Taxpayer Advocate, click here. For more information about Low Income Taxpayer Clinics (LITCs), click here.