With the IRS and state tax authorities you can run but you can’t hide. In this article, we at Defense Tax will show you how to tackle your back tax debt issues without getting in trouble.
The IRS won’t forget you if you simply fail to declare your taxes. Though hundreds of thousands of people do this every year the IRS will always find ways of getting the money they are owed, no matter how rich or poor they are. This is why you need to face your back-tax problems now and tackle the problem. Facing your problems now is far better than the long-term pain of being a tax fugitive.
Here are three essential things to do when you owe money to the IRS.
File your tax return regardless
The key to dealing with the IRS at all times is being honest with them. If you fail to file this year’s tax return – and all previously missed ones – the IRS will refuse to come to the table to negotiate with you.
Ultimately it doesn’t matter if you cannot find the money to pay your back taxes as there is always a way forward as we will discuss below. If you do file your tax returns, current and previously missed, doors open to allow you to resolve the problem.
Another thing to consider is that there will be penalty charges made for late filing, adding to the amount you need to pay in the end.
You can even file your tax returns without paying what you owe. Ultimately that tells them how much you do owe and then you can negotiate.
Negotiate your back-tax issues with the IRS
When you have filed all your overdue tax returns the IRS and state tax authorities will be willing to talk to you over your back taxes.
The penalties for not paying back taxes are punitive and can be the interest of 5% per month + penalty charges on top, adding up to a quarter of your original bill in fees. Painful? It will be less so when you negotiate with them.
The commonest outcome the IRS offers is a repayment plan. Like paying for your car loan you will pay the money you owe in installments. When you deal with the tax authorities you can take the time to prove how much you can afford over your basic living expenses that will include rent and mortgage, reasonable household bills, and other things.
In extremely rare circumstances the IRS can allow you to pay a smaller overall sum than your final back tax bill. The offer in compromise is offered where you can prove there is no reasonable way to pay your back taxes in any reasonable time period without undue hardship. This isn’t offered to everyone like flowers at a wedding – you will have to do a lot of paperwork to prove your inability to pay and the change of circumstances that led to your current position.
Get help from Defense Tax
If the tax system was easy then accountants and tax attorneys would go out of business! To navigate your way through the bureaucracy of negotiating a deal with the IRS or state tax authorities it pays to bring aboard experts who can help you with your back-tax issues.
Certified Public Accountants (CPAs) and experienced tax attorneys can make your life easier in dealing with the tax authorities. Why? This is what we do to make a living and we have made hundreds of people’s lives easier by negotiating the best outcomes for our clients.
Defense Tax will sit with you to get an exact idea of how much you owe in back taxes and help you find a solution to resolve the problem. We negotiate with the tax authorities on your behalf to achieve a solution that will suit you, from an installment plan right up to an offer in compromise where you will pay just pennies in the dollar of your original tax bill. Contact us today to discuss your needs!