Many times, it starts by accident. You file one return, only to be surprised that you owe more money than you can pay, and you duck your head in the sand like an ostrich for a few years, hoping the problem will go away. Unfortunately, it doesn’t. The problem grows bigger, snowballing into owing thousands of dollars.
It doesn’t help matters that the IRS is becoming increasingly aggressive in its collection efforts. They’ve even increased the number of audits conducted – and small wonder why. The government needs all the money it can get, and its primary source of income is you!
If you haven’t filed taxes in a few years or more, here’s what you can do.
• First, you have to file any and all missing tax returns. The IRS won’t resolve a liability unless all tax returns are filed. The IRS will want you to commit to a deadline by which to file delinquent tax returns, but first, ask them (or your representative will ask) what returns have been filed so far, what taxes you owe, and if any refunds have been applied to your delinquent taxes.
• If you’ve received a demand for payment from the IRS, take heart: it is most likely more than you actually owe. These don’t take into account any tax provisions that are in your favor.
• You will likely have the option to settle, which means not paying back your debt in full, but working with the IRS to agree on a lesser amount.
• If you want to settle the debt amount with the IRS, then contact a tax relief firm (like Taxation Solutions) to help you navigate the process. Why hire a pro? The settlement process is time consuming, and if you’re handling it yourself (which you have the legal right to do), you’ll have to take a lot of time off of work, which you may not be able to afford. Professional knowledge of the tax law and IRS requirements will help not only free up your time, but also expedite the process and protect your assets.
• The worst case scenario: Failing to pay past-due taxes is a misdemeanor subject to fines up to $25,000 for each delinquent year, and possibly even a year of jail time. However, the IRS would rather have your money than pay for your prison-time, which means that if you come forward voluntarily, they’ll work with you to settle and/or set up a payment plan.
• Your IRS settlement decision may take as little as a month, or as long as several years, depending on the complexity and severity of the situation. The best way to help the process move faster is to comply with your representative’s requests and reply as quickly as possible.
Taxes can easily take you by surprise, especially if you’re self employed or a contract employee. Contact us for a free consultation today so you’ll know exactly what to expect.
Original Post By: Barry Fowler
Subscribe to TaxConnections Blog
Enter your email address to subscribe to this blog and receive notifications of new posts by email.