By Rajbir Athwal
A majority of taxpayers get a tax refund from the IRS each year while a minority of taxpayers get neither a big refund nor a big tax bill. But what if you are one of those who ends up owing? The IRS encourages you to pay the tax liability by imposing significant penalties and interest on late payments if you do not pay on time.
Following are a few options to consider:
Loan – Obtaining a loan, from a relative or friend, a credit card, or home equity, is one option which may or may not be available to all taxpayers.
Installment Agreement – If the taxpayer cannot pay the full tax liability on the due date, the IRS will allow an installment agreement. There are different kinds of payment plans. In addition, there are user fees and interest associated with them as well. The caveat is that you have to be compliant for filing requirements, and I will talk about compliance issues in my next post. In making the agreement, you will have to agree to keep all future years' tax obligations current. If you don’t make your payments on time or have an outstanding past due amount in a future year, you will be in default of the agreement, and the IRS has the option of taking enforcement actions to collect the entire amount owed. If you would like to discuss different installment plans, give me a call.
Offer-in-Compromise – The IRS has 10 years to collect the tax and if the taxpayer cannot pay the full amount, the IRS can accept less than the full amount owed. There are rules to figure out an offer that the IRS might accept.
If you would like to discuss your options, please give this office a call.
If you or somebody else you know are having IRS issues please feel free to contact me firstname.lastname@example.org or call me 301-461-2022. The IRS doesn't like to be ignored. Be proactive.
Enrolled agents are federal tax practitioners licensed by the Treasury Department.