The Internal Revenue Service offers taxpayers several options if they cannot pay their tax bills in full.

Those who are unable to file their tax return by midnight, April 16, the traditional date of April 15 is a Sunday this year also can ask for an automatic four-month extension.  That extension, however, doesn’t apply to any taxes owed, which must be paid on time.

Filing for an extension allows taxpayers some extra time to make sure all of their paperwork is in order, but it doesn’t push back the deadline to send the IRS a tax payment. You are required to estimate what you owe and send that amount with your extension form to the IRS.

Any tax liability that is not paid by the April 16 due date could be subject to interest and a late penalty.  Taxpayers should use IRS Form 4868 to request an extension.  For an additional two months extension thereafter another extension must be requested using Internal Revenue Service Form 2688.

THERE ARE A VARIETY OF WAYS TO PAY A TAX BILL:

• Credit card.  Taxpayers can use American Express, MasterCard or Discover to charge taxes due by calling either Official Payments Corporation at (800) 2PAY-TAX (272-9829) or PhoneCharge Inc. at (888) ALLTAXX (255-8299).  A convenience fee is applied; Visa is not participating in the program.

• Careful consideration should be given to the interest rate charged by the credit card company.  The IRS installment agreement if approved currently charges 9 percent interest, plus a late penalty of one-half percent for taxpayers who filed returns on time. Some credit card interest rates of 18 percent or higher. The interest charged by the Internal Revenue Service is not deductible whereas in some instances if the credit card employed is tied to the equity in your home is in fact deductible. Most credit cards are not tied to the equity in a home, and therefore not deductible, at which point an evaluation of which interest rate makes more sense should be evaluated.

• Installment agreement.  IRS Form 9465 is used to request such an installment payment plan, which is guaranteed for taxpayers whose total liability doesn’t exceed $10,000, and have not had an installment plan in the past five years. An additional requirement is that the taxpayer must agree to pay the entire liability within three years or less.  Interest, late payment penalties and a $43 processing fee also apply.

•  Offer in Compromise  For large unpaid tax liabilities, the IRS can accept a lesser amount if the taxpayer cannot pay.  Form 656 is used to make such an offer, and the debt can often be paid off over time with fixed monthly payments.  If a taxpayer defaults, the entire original tax liability plus interest and penalties will be reinstated. Other stringent requirements apply, and you should consult us if this method of payment is something you want to pursue. Offers in Compromise are expensive to prepare, and unless you are almost destitute, the Internal Revenue Service is prone to disapprove the application.

• Direct debt.  Taxpayers who file returns electronically can have their taxes due debited by the IRS from a checking or savings account.  Taxpayers can specify the date for the debit, meaning they can file their return early and then wait until April 16 to pay the bill.