Frequently Asked Taxpayer Questions Regarding The IRS
Some of the most frequently asked questions by taxpayers who owe money to IRS have been discussed below in this post:
- How To Deal With What You Owe To The IRS
- What Happens When You Can’t Pay What You Owe The IRS
- What If You Can’t Pay Your Taxes?
- Do You Know, How Much You Owe In Irs Back Taxes?
- How To Negotiate Back Taxes With The IRS?
- How To Set up an IRS Payment Plan?
- What Is The Internal Revenue Service (IRS)
Internal Revenue Service (IRS) is the government agency of United States government responsible for the collection and enforcement of taxes.
What Are IRS Back Taxes?
In the United States of America, a majority of the Americans manage to get a tax refund at the end of the year. There are taxpayers who will owe money to the IRS because of various reasons. This tax debt owed to the IRS is termed as back taxes. An experienced IRS Tax Attorney will be able to protect you and take over your negotiation with IRS.
Whatever deal you strike, you must follow the terms down to the letter. If you default and miss a payment you’re considered "in default" and then “the gloves come off”.
If you want to know how much tax debt you owe to the IRS, it will depend on whether the tax debt relates to returns you have already filed or to non-filed tax returns. You can calculate accurately what you owe even without contacting IRS, no doubt at some point you or your representative will need to contact the IRS for a resolution.
There are different steps to be followed if you want to be clear as to how much you owe IRS. Obtain copies of all tax returns: The first and the foremost thing you require is to gather all of your relevant returns and documents that relate to each year you still owe back taxes for.
Each of your tax returns will report the amount of tax you owe but never paid. If you have filed the return and the copy of the return is not available, you can collect it from your accountant and if the return has been misplaced, you can apply its copy to the IRS.
Past due tax returns must be filed by you: If you have not filed tax returns previously, in such cases, you have to prepare your back returns for calculation of the amount you owe each year. However, when you do, you must use all tax forms for the year you are filing.
What are your interest and penalties you must calculate: Whether you have filed the tax return or not or you are filing it for the first time, it is necessary that you must increase your tax bill for the interest and penalty charges the IRS impose on you when you paid the taxes late. Calculating your interest and penalties will provide you with a more accurate estimate of what you need to pay.
Pay your back taxes: When it is determined by you how much you owe to IRS, your outstanding back tax balance will continue to accrue interest each month it remains unpaid.
If the amount you owe is significant and you are unable to make a lump-sum payment, you can contact the IRS to work out a payment plan. Once your installment plan is in place, you can avoid more severe collection enforcement by the IRS as long as you adhere to all terms of the agreement and make each payment on time.
If You Can't Pay Your Back Tax Debt
IRS FRESH START PROGRAM
The IRS Fresh Start program makes it easier for taxpayers to pay back taxes and avoid tax liens. Even small business taxpayers may benefit from Fresh Start. Here are three important features of the Fresh Start program: IRS has announced new policies and programs to help taxpayers pay back taxes and avoid tax liens.
TIPS FOR TAXPAYERS WHO OWE MONEY
TO THE IRS.
As stated before, it is never advisable to ignore or hide from the IRS when you’re unable to pay. In fact, the IRS may be more willing to work with you than you think. If you’re unable to pay your tax debt in full, your best option may be to request an installment agreement.
Also known as an IRS Payment Plan, this arrangement allows you to pay your tax debt over a period of time (up to five years in some cases), depending on the type of tax debt and how much you owe.
If you’ve received a notice from the IRS, your first step should be to respond by following the instructions included with the IRS notice. The IRS will instruct you to contact them by phone or mail. You will then receive further IRS notices.
You Must Always File Your Tax Returns
Deal with an IRS Problem in a Proactive MannerYou should deal with this matter actively. IRS will not take action against you promptly regarding tax penalties. It will take months before they take action against you. IRS notices are computer-generated statements. These IRS notices are on a schedule leading up to a "Notice Of Intent to Levy".
IRS Installment Agreement
The IRS provides the option to make payment by way of an installment agreement or by way of an offer in compromise. Under the installment agreement, the taxpayer pays the amount due over a period of time. There are many rules regarding IRS Installment Agreements. You should confer with an IRS Tax Attorney before you agree to any payment plan with the IRS.
With an Offer in Compromise settlement, a taxpayer has to pay an amount which is substantially less than the amount actually owed. An Offer in Compromise settlement may be paid in monthly installments.
You must file all required returns and be current with estimated tax payments. If an installment agreement is approved, a one-time user fee will be charged. The user fee for a new agreement is $105 or $52 for agreements where payments are deducted directly from your bank account. For eligible individuals with lower incomes, the fee can be reduced to $43.
Additional Time To Pay
If you fill out the fill out Form 9465— or better yet, simply go to www.irs.gov and fill out an online payment agreement application You’ll find out right away if you’re eligible; going the snail-mail route generally takes 30 days or longer. If you owe $50,000 or less and can pay what you owe within six years, you can get a payment agreement, according to the IRS.
Be Regular In Your PaymentsIf at any time you default, the IRS may impose heavy penalties on you or can seize your property and may seize your bank accounts as well.
Always Take The Help Of An IRS Tax Attorney
Credit Card PaymentsYou can pay your tax debt with a credit card. The interest rate on a credit card may be lower than the combination of interest and penalties imposed by the Internal Revenue Code.
Electronic Funds Transfer
You can pay your tax debt by electronic funds transfer, check, money order, cashier’s check or cash. To pay using electronic funds transfer, use the Electronic Federal Tax Payment System
Online Payment Agreement
If you owe $25,000 or less in combined tax debt, penalties, and interest, you can request an installment agreement using the Online Payment Agreement application at www.irs.gov.
Collection Information Statement
You may still qualify for an installment agreement if you owe more than $25,000, but you are required to complete a Form 433F, Collection Information Statement.
Taxpayers who have a tax debt may want to consider changing their W-4, Employee’s Withholding AllowanceCertificate, with their employer. A withholding calculator at www.irs.gov can help taxpayers determine the amount that should be withheld.
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