If you can't pay your debt to the Internal Revenue Service (IRS) at the April 15 deadline, you have several options to pay off what you owe. The IRS may allow you to pay your debt through a short-term extension, a streamlined installment plan or an offer in compromise. Contact the IRS to explain your financial situation and discuss your options for paying your debt.

Short-Term Extension

Call the IRS and ask for a short-term extension. This extension allows you an extra 30 to 120 days to pay off your debt. IRS representatives will ask you to verify your personal information and your current financial situation. Each payment plan charges penalties, such as "failure to pay," and daily compounded interest on any debt that remains unpaid after the April 15 deadline, but you will pay less in penalties and interest through a short-term extension than through an installment plan.

Streamlined Installment Plan

Complete and submit a Form 9465 to the IRS. This form is called an Installment Agreement Request. The IRS will take up to 30 days to review the form before approving or denying your request. If the IRS grants your request for a streamlined installment plan, then they will charge you a fee to be deducted from your first payment. Under this plan, you must pay off your debt within five years. You need to specify on the form the amount of your debt and how much you intend to pay every month. The IRS is more likely to grant your request for a streamlined installment plan if you can pay off your debt within a year and keep up with the year's taxes.

Offer In Compromise

An offer in compromise allows you to pay off less than what you owe. If you have filed and paid your taxes in the past and "collection of the entire tax liability would create economic hardship, or exceptional circumstances exist where collection of the entire tax would be detrimental to voluntary compliance," then you may qualify for this plan. Complete and submit a Form 656. This form requires an application fee. This form should only be used in circumstances of extreme economic hardship and should not be abused as a way to constantly avoid paying off your full debt. An offer in compromise allows you to make payments as a lump sum or as fixed payments over a specified time.

Source:

Uncle Fed's Tax Board: Can't Pay the IRS - What are Your Options? by Greta P. Hicks, CPA

SmartMoney: Dear IRS, I Can't Pay; 2009

IRS.gov: The "What Ifs" of an Economic Downturn

As the other answer referred to there are several possibilities. Some will depend on how much you owe and how for how long. It will also depend on any assets you now possess, and any income. Short reply -- you need to talk to a professional about your particular details. Often tax attorneys and or CPA's will not charge for an initial consult. I would not do nothing -- likely your are in they system -- they won't forget.