What if you can't pay

Each year, millions of taxpayers come up short.

If you can't afford to pay your tax bill, attach Form 9465 to the front of your return with a letter proposing an installment plan. And expect to pay a lot.

You'll pay interest on the late payments according to adjustable quarterly rates. The law sets the rates at the short-term treasury rate, rounded to the nearest whole percent, plus three points -or 8 percent, compounded daily, starting Apr. 1. Plus a $43 fee to set up the plan. And the killer: a late-payment penalty of 0.5 percent per month up to 25 percent on the unpaid balance. Combined with the interest, that means you'll pay up to 12.8 percent a year for the "loan."

The statute of limitations on tax evasion lasts 10 years. The IRS rarely grants longer payment schedules when the taxpayer waives the statute.

This year, Congress established taxpayers' legal right to pay taxes in installments, provided the back taxes don't amount to more than $10,000, and you haven't made a late tax payment or failed to file in the past three years.

The IRS also accepts payment plans from people who don't qualify for the statutory right, spokesman Don Roberts says. Altogether, that amounted to 2.7 million people in 1996.