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It is tax season, and you owe thousands to the Internal Revenue Service. But you cannot pay.

Now what?

"The key element is proactivity," says Lance D. Christensen, a certified public account and partner with Margolin, Winer & Evans, a CPA and business advisory firm in Garden City, Long Island.

"Be proactive in filing for an extension. Be proactive in communicating your inability to pay. If the collections unit of the IRS reaches out to you first, things can get ugly."

No matter how much you owe, throwing in a portion of your payment immediately "as a peace offering" is your best option, says Bill Farmer, an enrolled agent in Lexington, Kentucky.

(An enrolled agent is a person who is able to represent taxpayers before the IRS.)

Farmer calls this an unofficial payment plan. "If you owe a big balance on the due date, send the IRS about 40% of what you owe," he says.

In about six weeks, you will get a letter explaining the full balance of what you owed and that you only paid part of your bill. If you have the balance by then, write the check. If you do not have the balance, send as much as you can, he advises.

Delaying payment can only last for so long, though. And it only works if you owe less than $25,000.

If you owe more than that, you will need to do whatever possible to reduce your outstanding balance to that sum, then go on a payment plan that will give you up to 60 months to repay, using Form 9465.

Setting up a payment plan is easy, although it requires an origination fee of $120. If what you owe can be paid off within the next four months, says Farmer, call the IRS and request that time to pay in full.

Keep in mind that everyone who pays taxes late will be assessed penalties and interest.

If you fail to file any tax return at all - the worst possible choice - you will be charged 4.5% interest from April 15 onward. If you file but are unable to pay the full amount owed, the IRS levies a fee of .5% interest on the balance until it is settled.

For those who fail to file and fail to pay anything at all, the penalty can be as much as 25% of what you owe.

Farmer sees this problem fairly often when clients sell a home, have not paid capital gains tax and suddenly owe $10,000 to $15,000 as a result.

The IRS does not always apply a penalty to late payers, though. Farmer has seen some owing $5,000 to $6,000 who escape it, while those owing $10,000 are more likely to pay a small penalty.

Coming Up With Cash

But where to quickly access funds?

"Borrow the money from the bank or credit cards, or even family or friends," says Daniel Henn, a CPA based in Rockledge, Florida. "You generally don't want the federal government as a creditor."

Henn's advice? Sell something such as stocks, bonds and mutual funds. Cash in a certificate of deposit or hold a garage sale.

As a last resort, you can withdraw funds from an IRA or 401(k), which has its own set of tax implications. Another option - although it is far from ideal - is to borrow against your 401(k). Most plans allow for a loan of up to 50% of your balance.

Generally, taxpayers with assets are best off with an installment agreement.

"If the tax can be paid off within a 60-month period, it's a rather simple process to get this approved," says Crystal Stranger, an enrolled agent in Honolulu, Hawaii. "Lack of income and having assets can be a dangerous IRS situation, though, as when collections gets wind of this they are likely to escalate the process of attaching liens."

A lien is a public notice, filed in your local courthouse, that you owe money to the IRS. It can cost 30 points on your credit score and will make obtaining credit more difficult. If you try to sell an asset, you will need to pay off your IRS debt first before accessing any of those funds.

A levy is the next step after a lien and can be imposed through your employer - clawing back a portion of every paycheck or contractual payment - or your bank, freezing your assets to repay your unpaid taxes. Once the IRS has served notice of a levy, you have 21 days to respond and negotiate terms with them.