(NEW YORK) -- With the tax deadline of April 15 less than two weeks away, procrastinators who fear they can't pay what they owe have a number of options -- a few of them almost attractive compared with some alternatives.
The advice most tax professionals give is to do something -- whether that's filing for an extension or paying some of what you owe. Not filing simply sets you up for a lot more pain down the road.
"Don't put it off," a spokesman for the Internal Revenue Service told ABC News. "The most important thing is to file and file on-time."
If you don't pay what you owe, the IRS could file a Notice of Federal Tax Lien, which is reported in your credit report. Not only would you owe more money than you did originally through interest and penalties, your credit score could drop noticeably as a result. That could of course affect your ability to get a loan, mortgage and other long-term financial repercussions.
There are both failure-to-file penalties and failure-to-pay penalties. Filing late could trigger a penalty of up to 25 percent of your taxes. According to the IRS, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.
To avoid those negative consequences, here are some options if you can't pay your tax bill from Credit.com's credit expert, Gerri Detweiler.
1. Using a Credit Card
While the IRS doesn't directly accept credit cards, they authorize certain private companies to accept payment on their behalf, but this can be costly. Authorized processors charge fees between 1.88 percent and 2.35 percent. The IRS says these fees may be tax-deductible, however, according to the IRS credit card payment website. However, unless cardholders are using a 0 percent APR promotional financing offer, Detweiler says it may be best to avoid paying by credit card because the IRS offers its own financing options with lower interest rates. The IRS' underpayment interest rate plus a penalty is still pretty reasonable at a 7 percent annualized rate, though the rates can change quarterly.
2. Personal Loans
Detweiler says personal loans might be a good alternative to using a credit card. First, make sure the interest rate is lower than that offered by an installment agreement with the IRS and if taking out a personal loan will help you avoid a tax lien. Make sure you can afford the payments however, lest you risk more than you anticipated.
3. Request an IRS Payment Plan
If you are up to date with all your tax returns and owe $50,000 or less in combined tax, penalties, and interest, you can request an installment agreement to make monthly tax payments. You can use the IRS Online Payment Agreement to request your installment agreement. If you need to mail in a request, you can use the Request for Installment Agreement, Form 9465. There is a $52 fee to set up an installment agreement that withdraws monthly payments from your bank account, or $105 if you pay by check or have payments withheld from your paycheck. Interest is compounded daily plus you will have a payment penalty.
4. Request a Short Term Extension
In addition to the automatic six-month extension to file your taxes, the IRS offers the opportunity to request a short-term extension to pay of up to 120 days. The IRS doesn't approve the majority of these requests, however, Detweiler says, so you might be better off finding another way to pay.
5. Request an Offer in Compromise
Like the short-term extension to pay discussed above, an offer in compromise is also hard to get approved, Detweiler said. An offer in compromise allows taxpayers to settle debts for less than they owe under particular circumstances, such as if paying the tax could create an economic hardship for the taxpayer, if there is reasonable doubt if the tax liability is correct, if there is doubt the taxpayer could pay the debt. There is a $150 fee when you apply for an offer in compromise, which is waived for low-income taxpayers.
6. Apply for Currently Not Collectible Status
You may be able to apply for in "currently not collectible" status if you can't afford an installment plan or an offer in compromise. You would have to fill out a Form 433-F detailing your financial story, including your lines of credit, real estate, other assets, credit cards, income, living expenses and employment. The IRS would then put your tax bill on hold and reevaluate in a year, but interest and penalties will accrue.