Unfortunately, real estate agents and other small business owner’s and independent contractors sometimes find themselves in a situation where they owe the IRS. This can be a result of not making estimated tax payments timely or as the result of an unfavorable audit. Whatever the reason, you should understand there are options if you the IRS!
File Your Return and Face the Music!
The first instinct of a taxpayer who believe they owe the IRS is to ignore the problem and not file their tax return. This is a very bad idea! Did you know that filing a return late will result in a 5% per month (up to 25%) late filing penalty on the amount owed. If you thought the $20,000 you owed on your return was a lot, how about it being $25,000 only five months later, in additional to the late payment penalties of 1/2% per month you will incur. So, file on time, and only incur the late payment penalty. Get in an installment agreement and that late payment penalty drops to ¼% per month. Doesn’t that sound much better.
Ignoring the IRS can also result in tax liens being filed, levies of your bank accounts and assets, as well as garnishments of paychecks. The problem doesn’t get better by ignoring it. There are options. Face it and choose the best option for your situation.
What Are The Solutions Available?
There are a variety of options available that include:
- Payment plans that allow you to pay your debt over time. These can vary based on your ability to pay and can even result in a payment plan that will end up with a forgiven amount.
- Penalty Abatement may be an option for you where penalties are removed or reduced.
- Setting for the less than the full amount of the debt (Offer In Compromise Program) may be an option for you. These are based on ability to pay, not the amount owed.
- Currently Not Collectable is an IRS program that based on your inability to pay in your current financial situation, the IRS agrees to levy your assets or garnish you wages.
- Third Party Financing and other options
Do You Owe the IRS and Need a Tax Professioal?
If you are a Real Estate Agent or other Small Business owner, who needs professional help with your taxes, keeping your books properly, or dealing with any IRS issues, give me a call at (972) 821-1991 or send me an email at firstname.lastname@example.org. Learn more about us at https://jablonskyandassociates.com/real-estate/.