I am faced with a tax bill that I can't pay. Am I completely at the IRS's mercy, or do I have some options?
Here are some options for dealing with a tax bill you unquestionably owe:
Borrow from a financial institution, family, or friends and pay it in full.
Negotiate an installment payment plan with the IRS. Interest and penalty charges will continue to accrue on the unpaid balance.
Make an offer in compromise. That is, ask the IRS to accept less than the full amount due. Interest and penalties will continue to accrue.
Reduce, eliminate, or pay the debt through bankruptcy.
Ask the IRS to designate your debt (temporarily) uncollectible for economic hardship if you are out of work or your income is very low. This will buy you time to get back on your feet before dealing with the IRS. Interest and penalties will continue to accrue.
Wait for the statute of limitation on the collection to expire.