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Originally Posted by dawningmama  You are probably best filing on time, paying as much as you can. Balance due returns don't get processed until after all the refund returns are done so the first round of bills doesn't go out until June anyway. There will be penalties and interest on anything paid after 4/15, regardless of extension, as sunnysandiegan said.
If you need more time after you receive your bill, you can then call up and get a Full Pay Agreement for up to 120 days with no fee or an installment agreement (monthly payment plan) with a fee of $105 ($52 if you set is up as a direct deposit). Interest and penalties do accrue with either of these options, although the rate of penalty does drop once you are on a plan.
Once you have paid in full, write a letter explaining why you were unable to pay timely. Be very specific---if there was illness, give dates and doctor notes/hospital paperwork, whatever you have. If you have a good filing history, you can likely get all of your penalties reversed. The IRS has no authority to reverse interest, but if penalties are abated, the interest that was charged on that amount with self-adjust.
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Excellent advice. I owe a lot of money to the IRS and have been dealing with them for years. This advice is correct, if you owe money they won't get to you until June. By the way installment plans on amounts under $20,000 can be done without talking to the IRS, just download the forms.
I would say though as someone who started off owing the IRS a small amount that sort of grew (self employment) that you want to take care of this as soon as possible but as the same time, don't freak out. By the way an extension is only to give you time to file but if you owe you are still supposed to pay by April 15. Best thing go to the IRS website and you can get all the info you need.
Shay
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