Automatic Extensions

• The easiest preventive measure you can take to avoid delinquency is to request an automatic extension of time to file and pay your taxes. A six-month extension is available, and the only condition is that you mail Form 4868 to the IRS postmarked no later than April 15.
  
  

Installment Payments

• The IRS will readily agree to an installment payment plan as long as your total delinquent tax bill (including penalties and interest) is no more than $25,000. Payment plans will stop the IRS from coming after your property as long as you keep current on your payments, but they will not stop the accumulation of interest and penalties. If you owe the IRS more than $25,000 in delinquent taxes, the agency will check your finances to see if you can afford to make installment payments.
  
  

Uncollectible Status

• Uncollectible status is a temporary "cease fire" in which the IRS agrees not to place a lien against your property for a specified amount of time. It is granted to taxpayers who are temporarily unable to pay their taxes in installments but who expect to be able to regain their ability to pay at some point in the future. Penalties and interest will continue to accumulate during this time.
  
  

Offers in Compromise

• An Offer in Compromise occurs when the IRS gives up on collecting your full tax debt and settles for less than you owe. It will make an Offer in Compromise only if it determines, based on an examination of your finances, that you will probably never be able to pay your outstanding tax debt.
  
  

Failure to File: "Reasonable Cause"

• If your only problem with the IRS is failure to file your tax return on time, you may be forgiven interest and penalties if you can convince the IRS that you had "reasonable cause" for your late filing. An untimely death in your immediate family and a natural disaster are examples of excuses that the IRS will accept for failure to file a tax return on time.