April 6, 2012 2:10 am
According to the IRS, if you cannot afford to pay monies owed to the government, you should still file by the deadline date and pay as much as you can. This will prevent you from incurring a late filing penalty fee—5 percent per month of the balance due. Paying as much as you can when you file your return will reduce interest and penalty charges.
New York City-based tax practitioner David Selig offers this additional advice to those who cannot pay their taxes:
- File your tax return irrespective of your ability to pay. In 99.9 percent of all cases, failure to pay is only a civil matter, whereas failure to file is, under IRC 7203, a misdemeanor. Additionally, in some egregious cases, failure to file can actually be elevated to a felony.
- In most cases, the IRS will give you an installment agreement. However, be sure to go over your budget carefully before you call the IRS. Remember, the government will try to collect as much as it possibly can—theoretically, in the shortest amount of time. Unfortunately, the majority of installment plans fail because the taxpayer agrees to pay more than he or she can afford. Review your budget carefully so that you’re better prepared to negotiate a plan that works.
- Get professional help. If you owe more than $25,000, it's a good idea to be represented by a licensed professional who understands the rules of procedure and IRS guidelines. The IRS has streamlined the approval process if the amount owed is not more than $25,000 and can be paid off within a five-year period.
Published with permission from RISMedia.