What you should and shouldn’t do if you owe the IRS and can’t pay

This column was originally published in May 2021. It has been updated.

If you owe the IRS, how you decide to handle this debt could either soothe your anxiety or send you on an expensive journey that ends with more heartache than help.

So what should you do?

Let me share what Nina Olson, executive director of the Center for Taxpayer Rights, had to say. Olson, who formerly served as the independent national taxpayer advocate, has witnessed the financial calamity that can ensue when people who owe the IRS ignore the problem or seek refuge from pricey tax debt relief operations. The Taxpayer Advocate Service is an independent organization within the IRS that helps people resolve issues with the agency.

“I always tell people that the worst thing that they can do is nothing,” Olson said. “The IRS is not going to go away. It chugs along like a machine, and if you don’t respond to it, it will reach out to you in the form of levying your bank account or garnishing your paycheck.”

Here’s what Olson says you should and shouldn’t do if you owe the IRS.

SHOULD DO: CONTACT THE IRS >> There is so much assistance online at irs.gov. Click the link that says “Make a Payment,” and you’ll find information about options if you can’t pay your tax bill.

If you fear the wrath of the IRS, your instinct might be to do anything but contact the almighty agency.

Yet Olson said that’s exactly what you should do - with a caveat. Prepare for a long wait for help on the phone when you call the agency’s 1040 toll-free line (800-829-1040).

“I always say bring your knitting while you’re sitting on the phone,” Olson said.

There’s a good reason to confess your financial situation. The IRS will make a notation in your file that could put a hold on the more aggressive collection actions, Olson said.

“It will keep bad things from happening,” she said.

Also, be sure to file your return even if you can’t pay to avoid the penalty for failing to file. SHOULDN’T DO: FALL FOR FALSE

OR EXAGGERATED TAX DEBT RELIEF PROMISES >> You want a quick fix, so you consider calling the tollfree number for a company that says it has “skilled” agents who can make a deal with the IRS to solve your debt dilemma.

If you absolutely feel you can’t handle a collection issue on your own and need the services of a tax professional, do some research. Don’t default to contacting a company you heard about on the radio or a television commercial.