Filed Your Taxes But Couldn't Pay by April 15th? Here's What To Do Now
You filed your taxes by April 15th — and that was the right move. By doing so, you avoided the failure-to-file penalty, which adds 5% of the balance owed every single month you don't file — up to a maximum of 25%.
But now you’re staring at a balance you can’t afford to pay without seriously hurting your business.
Maybe paying it in full would wipe out your reserves.
Maybe paying it could leave you short on cash for expenses like inventory, marketing, or payroll.
Or maybe paying it all right now could force you to choose between staying compliant and keeping your business alive.
The truth is, you're not alone. A lot of growing e-commerce businesses end up here, especially in the early stages when you’re just getting started and still figuring out how taxes work as a small business owner.
The good news? You can stay compliant with the IRS, protect your business’s momentum, and take smart steps right now to get back in control.
In this blog, I’m going to walk you through:
What to do now if you can’t afford to pay your full tax balance
The IRS payment options that exist to give you breathing room
Why ignoring the IRS makes things worse (and what to do instead)
What happens if you leave your balance hanging (it’s not pretty)
How penalties and interest add up if you don’t act
And how to avoid getting stuck in this same situation next year
Step 1: First Things First — Make a IRS Payment Online
Even if you can’t pay the full amount you owe, sending in a small payment is better than doing nothing.
Making a partial payment shows the IRS that you’re not ignoring your responsibility. It also helps reduce the penalties and interest that are already accumulating the day after the tax deadline.
Even if all you can afford is $20, $50, or $100 right now, it’s worth it.
The goal isn’t to wipe out the full balance immediately — it’s to start chipping away at it and stay in good standing while you figure out your next move.
The fastest and easiest way to make a payment is through the IRS’s website. It allows you to pay directly from your bank account, Debit card, credit card, or digital wallet. Fees may apply depending on the method you choose.
Want to see what it actually looks like to make your first payment to the IRS? I recorded myself going through the process step-by-step because I want you to see it’s not as scary as it sounds.
Click here to watch the video.
In this video, I walk you step-by-step through how I made my first online IRS payment as a single-member LLC (disregarded entity).
Step 2: Choose an IRS Tax Payment Option for the Remaining Balance
Now it’s time to figure out how you will handle the rest of the balance.
The IRS offers several different ways to deal with unpaid taxes, but the key is choosing the option that best suits your situation.
If you can pay off the full balance within 120 days, you might qualify for a short-term payment plan. There is no setup fee if you can pay it off within the specified timeframe, and the application process is relatively straightforward when completed online.
If you need more time, a long-term installment agreement may be the best option for you. This spreads your balance out into monthly payments. There is a setup fee, but it provides breathing room if paying the entire amount upfront isn’t realistic.
If you qualify for a short-term or long-term plan, you can even set up a tax payment plan online directly through the IRS website.
There is also an option called an Offer in Compromise, which is a settlement with the IRS. If you qualify, you could settle your tax debt for less than what you owe. The IRS doesn’t accept everyone — you have to prove that paying in full would cause serious financial hardship — but it’s an option worth exploring if you’re struggling.
And if things are really tight, you might qualify for Currently Not Collectible (CNC) status. That means the IRS temporarily pauses collection efforts because you can’t afford to pay anything right now. (Just know that penalties and interest will still grow while you’re in CNC.)
Learn more about these four options in our blog
Step 3: Stay on Top of IRS Letters and Notices (Don’t Ignore Them)
While you’re working out your plan, know this — the IRS is still going to send you letters about your balance. And I get it. Those envelopes hit different when you already know you owe. But the worst thing you can do is ignore them.
IRS notices aren’t always aggressive at first. Sometimes they’re just reminders, letting you know your balance is unpaid or outlining your options. Other times, they have important deadlines you don’t want to miss.
The point is you need to open them. Even if it feels uncomfortable. Even if you don’t have the money ready yet. Staying responsive shows the IRS that you’re serious about resolving your account, and it keeps you eligible for easier solutions, such as payment plans or first-time penalty relief.
If you don’t understand a notice or are unsure about the next step, don’t guess. Reach out for help — that’s what tax professionals like me are here for.
Understand How Your IRS Balance Due Keeps Growing
Even if the IRS hasn’t taken any action yet, your balance isn’t just sitting there waiting. It’s growing quietly but steadily every day you don’t pay it off.
Here’s how it works:
First, there’s the failure-to-pay penalty. That’s an extra 0.5% of your unpaid taxes added every month — up to a maximum of 25%.
Then there’s daily interest, which the IRS charges in addition to the penalties. The interest rate changes slightly each quarter, but it is typically the federal short-term rate plus 3%. And yes — it compounds daily.
Over time, these penalties and interest can double or even triple the original amount you owed.
That’s why a small tax bill left alone for a few months can suddenly feel so much bigger by the time the IRS comes knocking.
Moral of the story: The sooner you start chipping away at the balance, even with small payments, the less damage penalties and interest can do. This isn’t about being perfect. It’s about being proactive and protecting your pockets in the long run.
Know What Happens If You Don’t Pay Your Tax Balance Owed
Now, let’s be real for a second, if you don’t make a move, the IRS eventually will — and trust me, you don’t want it to get to that point.
When balances are left unpaid and ignored, the IRS can start using their collection tools. That could mean filing a federal tax lien against your property, freezing your bank accounts with a levy, or even garnishing your paycheck. If you owe a significant amount, it can also impact your passport and your ability to travel internationally.
And here’s the thing — once the IRS moves into collection mode, it’s a lot harder (and more expensive) to fix it. You lose access to easy payment options, and penalties and interest keep racking up every single day.
I’m not saying this to scare you.
I’m saying it because you still have control right now. Taking even small steps — like making a partial payment, setting up a plan, or responding to notices — keeps you in the driver’s seat before it spirals.
Handle This Year — and Set Yourself Up for Next Year
Owing the IRS is stressful, no doubt about it. But the good news is, you’ve already done the hardest part — you filed your return. Now it’s about staying compliant while you work through the balance.
Remember:
Pay something, even if it’s small.
Make a plan that fits your situation.
Stay on top of IRS notices.
Don’t let things snowball by ignoring them.
Understand how penalties and interest grow — and how small moves now can save you big later.
And if you want to avoid being in this position again next year, here’s a bonus tip: Start making estimated tax payments for the current year. Estimated taxes are how you stay ahead of your IRS bill and avoid unexpected tax debt, especially if you’re self-employed, have side income, or just don’t have enough withheld at work.
I’ll be sharing more about estimated taxes soon, but please note: Staying ahead of them now can help you avoid owing — and stress — next tax season.
You don’t have to figure all of this out alone. If you need help setting up a payment plan, handling IRS letters, or making a tax plan for the future, I’m here to help. Book a tax consultation here and let’s make a plan that works for you.
Disclaimer: The content on this blog is for informational purposes only and does not constitute professional financial advice. While I am an accountant and enrolled agent, the information here should not be relied upon without seeking advice from a professional tailored to your individual circumstances. I disclaim any liability for actions taken based on the content of this blog.
