You filed your taxes—and now you owe more than you can afford to pay. If you’re wondering, “what if I can’t pay my taxes”, you’re not alone. Many taxpayers find themselves in the same boat, especially if they’re self-employed, had unexpected income, or underpaid throughout the year.

The good news is that you have options. The IRS has systems in place to help taxpayers who can’t pay in full, and the earlier you take action, the better your chances of resolving things without added pressure or penalties.

In this guide, we’ll walk you through what actually happens if you can’t pay your taxes, and what you can do right now to start addressing the situation head-on.

What Happens If You Don’t Pay Your Tax Bill?

If you’ve filed your return but can’t pay the full amount due, the IRS doesn’t come knocking immediately—but the clock starts ticking right away. As soon as your return is processed, the IRS begins charging penalties and interest on the unpaid balance.

The Failure-to-Pay Penalty is typically 0.5% of your balance per month, up to a maximum of 25%. On top of that, interest accrues daily, and the longer your balance remains unpaid, the more it grows. This means that even a few months of delay can significantly increase your total amount owed.

While that may sound alarming, the IRS doesn’t move to collections instantly. The process usually starts with a series of notices or letters outlining what you owe and urging you to pay. If no action is taken, the IRS may escalate enforcement over time with steps like:

• Federal tax liens against your property
• Wage garnishment
• Bank account levies

It’s important to note that you won’t be arrested or sent to jail simply for owing taxes. Tax debt is a civil matter—not a criminal one—unless there is evidence of fraud or intentional evasion. Still, letting a balance sit without taking action can make the situation far more difficult and stressful to resolve later.

The takeaway? If you can’t pay your taxes, don’t ignore the debt. The IRS gives you a window of opportunity to work out a solution—but it’s up to you to take the first step before more serious collection actions begin.

What Not to Do When You Can’t Pay Your Taxes

When you’re staring down a tax bill you can’t afford, panic can lead to quick decisions that make things worse. It’s completely understandable to feel anxious or overwhelmed, but it’s important to avoid moves that could create bigger financial problems down the road.

Here are a few common mistakes to steer clear of:

Don’t take out high-interest loans or max out a credit card

It might seem like a quick fix to put your tax bill on a credit card or take out a personal loan, but these options often come with extremely high interest rates and inflexible repayment terms. If you’re already struggling financially, this can easily lead to a cycle of debt that’s even harder to break.

The IRS interest rate is generally lower than most credit card rates, and the IRS offers more flexible repayment options than most private lenders.

Don’t fall for “pennies on the dollar” promises

You’ve probably seen ads or heard radio spots claiming to settle your IRS debt for next to nothing. While the IRS does offer programs like the Offer in Compromise, qualifying for them requires strict financial documentation and a trusted advisor to help negotiate on your behalf.

If a company promises to wipe out your tax debt without even reviewing your financials, that’s a red flag. Be cautious of scams or overly aggressive sales tactics and only work with trusted tax advisors and professionals.

Don’t assume the IRS will forget about it

Tax debt doesn’t disappear on its own. If you don’t address it, the IRS will continue to add penalties and interest and may eventually begin enforcement actions like wage garnishment or liens.

Even if you can’t pay your taxes in full right now, taking some kind of action—even something small—is always better than doing nothing.

What To Do When You Can’t Pay Your Taxes

If you can’t pay your tax bill in full, the worst thing you can do is ignore it—but the best thing you can do is take action based on your financial reality. The IRS actually provides multiple options for taxpayers who are struggling, and choosing the right one depends on your situation.

Review What You Can Realistically Afford

Before reaching out to the IRS or a tax professional, take a clear look at your finances. Can you pay part of your bill now? How much could you afford monthly without falling behind on other essential expenses?

This number will help guide the kind of relief options you may qualify for—and make any repayment arrangement more sustainable.

Set Up an Installment Agreement

An Installment Agreement allows you to pay off your balance over time in monthly payments. As long as you make your payments on time, the IRS won’t pursue aggressive collection actions like levies or garnishments.

There are short-term (under 180 days) and long-term options depending on how much you owe and how quickly you can repay it. Many taxpayers can even apply online if their balance is under $50,000.

Read more: Understanding Installment Agreements

Explore an Offer in Compromise or Currently Not Collectible Status

If your financial situation is more serious, you may qualify for additional IRS relief:

An Offer in Compromise (OIC) allows eligible taxpayers to settle their debt for less than the full amount. It’s tough to qualify, but worth exploring if you truly can’t pay and have limited assets.

If you’re facing financial hardship and have no ability to make monthly payments, you may be placed in Currently Not Collectible (CNC) status, which temporarily pauses IRS collection efforts.

Both of these programs require full financial disclosure and documentation—but they can provide major relief for those who qualify.

Consult with a Tax Professional

IRS resolution programs can be confusing, and making a mistake could cost you time, money, or both. A qualified tax relief professional can help you understand which programs are a realistic fit, gather the required documents, and deal directly with the IRS on your behalf.

If you’re not sure where to start, getting expert guidance can give you clarity—and peace of mind.

Final Thoughts: Take the First Step with Confidence

When you’re dealing with tax debt, uncertainty is often the hardest part. But the truth is, the sooner you take action, the more control you’ll have—and the better your outcome can be.

You don’t have to navigate IRS forms, deadlines, and relief programs on your own. Whether you need help setting up a payment plan, requesting penalty relief, or exploring deeper options, Lifeline Tax is here to guide you every step of the way.

Schedule a free consultation today and let’s build a plan that works for your situation—so you can stop worrying about tax debt and start moving forward.