5 Things to Know When You Owe the IRS
It’s everyone’s greatest fear at tax time — you owe the IRS. Even if you happen to be lucky enough to have the money on hand to pay what you owe, it isn’t an expense that most people are happy about. Here are 5 things you should know if you find yourself owing the IRS at tax time.
You Can Pay in Affordable Installments
If you find out that you owe the IRS, don’t panic if you don’t have the full amount on hand. You do not have to go into debt because of your tax bill. The IRS actually provides a variety of options for paying what you owe, including installment agreements and short-term payment plans. If you owe less than $50,000, you can even set up your installment agreement online.
It’s Best to Pay What You Can
While you likely have the option to set up a payment plan or make smaller payments on the balance you owe, it’s a good idea to pay as much as you can up front. The reason for this is because any penalties and interest you are charged will be based on the total amount you owe. If you pay as much as you can right away, the balance owed decreases as well as the penalties and fees. It might be painful to make that payment, but in the end, it will save you money.
You Still Need to File a Return
It might seem like the best way to avoid owing the IRS is not to file a return at all. Unfortunately, this isn’t a good idea. If you fail to file your return, you will be charged an additional penalty for each month you owe taxes, up to 25%, as a failure to file penalty. This is in addition to the interest you will be charged on the amount you owe.
The IRS Cannot Just Take Your Assets
Fortunately, you have a right to due process. This means you don’t have to worry about the IRS seizing your bank account and garnishing your wages without first providing written notice. Further, due process means you get an opportunity to challenge any IRS claims before they can begin any collection activity. In some cases, you might even be able to take the IRS to court. If this happens, the IRS cannot collect until the judge issues a decision.
You Will Not be Jailed if You Owe the IRS
Another fear that consumers sometimes have when they owe the IRS is that they could somehow end up in jail. In the US, you won’t go to jail for your tax debt. You can, however, go to jail for illegal activity such as cheating on your taxes or tricking tax collectors.
If you find yourself in the middle of tax problems, a NYC tax attorney at Mackay, Caswell & Callahan, P.C. has the experience you need on your side. Fill out our online contact form or call 844-MCC-4TAX (622-4829) to speak with an experienced tax lawyer from one of our offices in Albany, New York City, Rochester, Syracuse, Utica, and Watertown.
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