IRS Tax Debt Solutions
If you owe back taxes and penalties what can you do? Is IRS tax debt insurmountable? First, as with any financial worry, try not to panic. Handling the situation step by step in a calm manner will always yield a better result. Situations with the IRS can range from simply being late filing your taxes one year to substantial penalties and even legal ramifications.
One of the most common tax penalties is the failure to file penalty. This penalty is 5% of the tax not paid, not to exceed 25% of the tax amount owed. If you are more than 60 days late, you will owe 100% of the tax amount or $100, whichever is less and may owe more than this. If you have not filed your taxes, simply get it done and pay the penalty. The problems will only worsen with time. If you have a reasonable cause for not filing on time, the penalties may not apply.
Failure to pay penalties also may apply to many taxpayers. Again, these penalties are not unreasonable, and you should just accept the penalty and make timely payment arrangements. Penalties range from ½ to 1% of the tax owed, but does not apply if you have filed for and been granted an extension. You cannot be charged a penalty of more than 25 % of the taxes owed, and you may be exempt from the penalty if you have good cause for not having paid on time.
Clearly, the worrisome tax issues with the IRS are often bigger than reasonable penalty fees for late filing or late payment. If you owe substantial taxes to the IRS and are unable to pay, you may be able to settle your tax debt via legit and legal programs administered by the Internal Revenue Service. There are several options available to manage taxpayer debt in manageable ways. If you owe a substantial amount of money to the government, do consult a tax professional for assistance.
The Internal Revenue Service does offer installment payment plans to settle your back taxes and pay any relevant penalties. Do consider taking advantage of automated payment options for such a plan to prevent any possibility of late payments or lost checks.
One IRS option to settle your tax debt is called the Offer in Compromise program. More information is available at the official site; however, you should realize that the IRS expects an offer that exceeds the amount that could be realized by liquidating your personal or business property.
Another possibility is the Partial Payment Installment Agreement. You can find out the specifics of this option at the IRS.gov website. In this case, the taxpayer agrees to a payment plan that will not pay the debt off in full. At the end of the payment agreement, when completed to the terms of the agreement, the remaining debt is forgiven. A tax professional can help you choose which of these options is better for you.
In a few cases, particularly with older tax debts, bankruptcy may discharge your debt to the IRS.
Do you owe more than $10,000 in back taxes to the IRS? We recommend a service called 411 Tax Relief to help with IRS leans, levies, and audits.
If you are looking for a tax refund we have a advance provider who can help get you money before your IRS check comes in the mail from the US Treasury.