You finally get down to the bottom line of your tax return, and the balance due to Uncle Sam is much more than you expected. In fact, it's more than you can afford to pay. You've dug through the couch cushions and checked all your pants pockets, but all you got was $26.55 and a lot of lint. What now?

First and most important, don't let your inability to pay your tax liability in full keep you from filing your tax return properly and on time. Include as large a partial payment as you can. Simply filing your return, even if you don't include full payment, can save you substantial amounts in late-filing penalties.

Not only that, but you can keep the Internal Revenue Service wolves at bay with some payment extension procedures and installment-payment arrangements. This will keep the IRS collection division from instituting its collection process.

Too many taxpayers hide their heads in the sand when they run into financial difficulties. But tax liabilities don't go away if ignored. It's very important that you file a properly prepared tax return even if full payment cannot be made. If you don't cooperate with the IRS, you can expect escalating penalties, plus the risk of having liens assessed against your assets and your income.

Down the road, the collection process could also include seizure and sale of your property. In many cases, these tax nightmares can be avoided by taking advantage of arrangements readily offered by the IRS.

So what to do if you don't have the money? Here are five possible solutions.

Pay late
If your inability to pay the taxes you owe is simply a short-term cash-flow problem, and you'll have the funds to make the payment in a few weeks or months, the solution is simple. Pay as much as you can when you file your tax return. That payment will help reduce the penalties and interest you'll be charged.

In about 45 days, the IRS will send you a bill for the remaining balance due. If you can pay it then, do it. If you can't, then send as much as possible (again, reducing penalties and interest) and hang on. In another 45 days or so you'll get another bill from Uncle Sam. Hopefully you can then pay the balance due.

You'll likely be able to go through two or three of these billing cycles before the IRS bugs you for some type of formal payment method. But if you can clear up the matter using bigger chunks of payments over two or three IRS billing cycles, you'll pay some interest and penalties, but you'll save some time by not being required to complete additional IRS paperwork.

Borrow
Try to put the bite on your friends or family. Seriously. If you can pay the entire amount with borrowed funds, you'll reduce the penalties and interest you'll owe Uncle Sam. And I'm sure you'll find making repayments to friends and/or relatives a much more pleasant experience than making payments to the folks at the IRS.

If the friends or family thing doesn't work out, consider a bank loan. Again, paying your friendly banker is generally preferable to making payments to the IRS over a long period of time.

Pay by credit card
Remember that you can always go the credit card route. As an alternative to paying by check, the IRS (and many states) will gladly accept payment by credit card. We generally don't recommend credit card payments, because the fees and interest rates associated with this type of payment are pretty high. But sometimes you gotta do what you gotta do.

You can use your American Express, MasterCard, Visa, or Discover card to make your payments.

Installment agreement
If you're still reading, it's possible that none of the above solutions fit. If that's the case, you should consider a formal installment agreement with the IRS. But now you're talking about dealing with the IRS directly and possibly completing some additional forms and paperwork.

Generally, the IRS will accept an installment agreement if the tax owed is less than $25,000 and the balance due will be paid within five years. Additionally, if your balance due is $10,000 or less, and you meet some other guidelines, the request can't be denied by the IRS. You'll be required to pay a "user fee" (currently $43) to obtain the installment agreement, and you'll still get hit with late payment penalties of 0.25% monthly. But an installment agreement is still better than ignoring your obligation.

If you think an installment agreement is for you, make your request on IRS Form 9465 (Installment Agreement Request). You can file this form separately, or you can simply attach the form to your tax return, which should be filed by the normal April 15 deadline. The form is only one page long and requires a minimal amount of information, although the IRS could request more information from you down the road.

Extension to pay
If all else fails, you can request a six-month extension of time to pay your taxes. But this extension will be granted only if the payment will cause undue hardship on you or your family. And don't confuse the term "undue hardship" with "inconvenience." You'll have to prove that you can't sell assets and/or borrow to pay your taxes except under terms that would cause severe loss and undue hardship.

As with the installment agreement, you'll be required to file additional documents. You'll have to provide statements of assets, liabilities, income, and expenses for three months preceding the filing due date. You can use IRS Form 1127 if you find that you might qualify for an extension of time to pay your taxes. But be warned: Form 1127 must be filed by the due date of the tax return. And even if you do qualify for an extension to pay, you'll still be charged interest on the balance due.

Conclusion
It's no fun to pay your taxes -- we all realize that. And we hope you've been able to use many of our weekly tax articles to whittle your "fair share" of tax liability down to the bare minimum. But if you find yourself with a tax balance due and an empty checkbook, don't just throw your hands up. Do the right thing -- or at least do something. You'll save yourself substantial penalty and interest dollars by addressing the issue head on.

If you like the way Roy Lewis simplifies confusing tax issues, check out his just-published book, The Motley Fool's Investment Tax Guide 2002: Smart Tax Strategies for Investors. This handy 360+ page guide covers just about every tax aspect of a typical Fool's life: investing, marriage, children, education, homes, home offices, retirement accounts, medical expenses, and much more.)