Penalties can greatly increase your tax debt. Usually, the IRS charges a 0.5% penalty for late payment of taxes. Even if you are paying your tax debt in installments, the IRS can charge a penalty on whatever amount remains to be paid.
There are two ways to lower IRS penalties. The first one is through penalty abatement. You can get full relief from penalties if you paid and filed late due to an unavoidable circumstance such as critical illness, theft, natural disaster, or divorce. The IRS calls this a ‘reasonable cause’.
If you can convince the IRS that you intended to pay your taxes on time, but you were prevented from doing so due to a reason beyond your control, the IRS may remove the entire penalty.
Even if you cannot qualify for penalty abatement, you can still lower your tax penalties. You can schedule your payments in such a way that you pay more up front. That will bring down your total tax debt.
Penalties are one of the primary reasons for the speedy increase of a tax debt. If you cannot afford to pay more early on and cannot get your penalties abated, there are other options available to you.
For taxpayers that can only pay a partial amount of their tax debt or no amount, other resolutions such as Offer in Compromise and Currently Not Collectible exist.