When IRS says you owe money, don't panic. Take one step at a time. Remember, you have rights. Calculate a rough estimate of interest at 1 percent per month. Often, an IRS computer generates penalties that can be fully abated.
Penalties are negotiable, so always try to get penalty charges excused.
As long as IRS expects money from you, your bargaining position is stronger. You'll be promising to pay the full taxes owing, plus interest, usually in equal monthly installments, but IRS will not take collection action while the agreement is in force. You must provide financial information so that IRS may determine whether you can afford to pay the tax immediately. Unfortunately, IRS is notorious for canceling installment arrangements without warning and then levying bank accounts or paychecks. In response, Congress enacted new rules to make IRS comply with installment arrangements once in effect.