So, you forgot to or were unable to pay your taxes and were notified by the IRS that they are coming to claim your soul as payment. At Freedomtax, our staff have been providing tax relief services for 15 years, and before you curl up in a fetal position and cry, here’s a comforting fact: you are not alone in this predicament. A sizeable amount of the population has to deal with non-payment issues due to their low income. Therefore, here are a few steps to utilize that can help you to pay back your tax debt to the IRS before they are forced to take any actions:
Pay the Minimum and Notify the Authorities
If your finances are in too much of mess for you to be able to make the payment for the tax bill, don’t just sit there and do nothing about it. File in your tax return like you were planning to and include a form that notifies the IRS of your current situation. Also pay as much of the tax bill that you can currently afford. If you notify IRS about your situation, they will not only be more lenient and help you to avoid penalties and fines as well on your tax debt.
The IRS’s Payment Extension Plan
If you have submitted your payment for your taxes along with a request that notifies the IRS about the current state of your finances, the IRS will send you a bill along with a written notice of what you owe in full. Based on your situation, the IRS might choose to extend the time period given for payment to allow you to come utilize other sources to pay off the amount in full. The IRS can grant a grace period of upto 120 days to allow you to come up with the full payment. However, until the tax debt is paid off, the amount that you owe shall remain subject to the IRS’s interest rate.
The IRS’s Installments Agreement Plan
If you are truly unable to pay your taxes in full, you can submit your tax return along with a request form for the IRS’s Installment Agreement plan to be applicable on your tax debt. The plan allows you to pay the debt off in monthly payments. However, the debt is subject to a monthly penalty fee for late payment and interest which are decided upon by the IRS.
Once the IRS has assigned you to a payment plan, do your best to avoid defaulting. Late payment or non-payment of your tax debt could result in more fines and penalties which only succeed in inflating the amount owed. If you feel that you will be unable to make a payment, notify the IRS immediately. If you can show proper proof to support your claim, the IRS may consider revising the installment payments to reflect your current financial status.
Although known for its aggressive tax collection methods, the IRS has realized that a lot more people who could previously pay the taxes are having difficulties due to unemployment, debt and other factors. These payment plans are made to help such people.
If you require any more information regarding tax returns, tax debt payments and procedures; please feel free to contact us at 407-344-1012 for more information.