As tax attorneys in Columbus, Ohio, we work with many individuals and businesses that simply cannot afford to pay their federal tax liabilities to the Internal Revenue Service. There are many reasons why a taxpayer may fall behind on paying the IRS. Falling behind on your taxes, however, is not the end of the world. Taxpayers do have collection alternatives to resolve those unpaid federal tax liabilities. Recently, the IRS issued its eleven tips of working with the IRS. Please see below.
Eleven tips for taxpayers who owe money to the IRS
1. Tax bill payments - If you get a bill from the IRS this summer that shows you owe late taxes, you are expected to promptly pay the tax owed including any penalties and interest. If you are unable to pay the amount due, it may be better for you to get a loan to pay the bill in full rather than to make installment payments to the IRS. That's because the interest rate and penalties the IRS must charge by law are often higher than what lending institutions may be offering.
2. Electronic Funds Transfer - You can pay your tax bill 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 by either calling 800-555-4477 or using the online access at www.eftps.gov.
3. Credit card payments - You can pay your bill with a credit card. Again, the interest rate on a credit card may be lower than the combination of interest and penalties the IRS must charge. To pay by credit card contact one of the following processing companies:
– WorldPay US, Inc. at 888-9PAY-TAX (or www.payUSAtax.com),
– Official Payments Corporation at 888-UPAY-TAX (or www.officialpayments.com/fed), or
– Link2Gov Corporation at 888-PAY-1040 (or www.pay1040.com).
4. Additional time to pay - Based on your circumstances, you may be granted a short additional time to pay your tax in full. A brief additional amount of time to pay can be requested through the Online Payment Agreement application at IRS.gov or by calling 800-829-1040. There generally is no set up fee for a short-term agreement.
5. Installment Agreement - You may request an installment agreement if you cannot pay the total tax you owe in full. This is an agreement between you and the IRS to pay the amount due in monthly installment payments. You must first file all required returns and be current with estimated tax payments.
6. Apply Using Form 9465 - You can complete and mail an IRS Form 9465, Installment Agreement Request, along with your bill using the envelope you received from the IRS. The IRS will inform you (usually within 30 days) whether your request is approved, denied, or if additional information is needed.
7. Apply Using Online Payment Agreement - If you owe $50,000 or less in combined tax, penalties and interest, you can request an installment agreement using the Online Payment Agreement application at IRS.gov. You may still qualify for an installment agreement if you owe more than $50,000, but you are required to complete a Form 433F, Collection Information Statement, before the IRS will consider an installment agreement.
8. User fees - 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.
9. Offer in Compromise - IRS is now offering more flexible terms with its Offer-in-Compromise (OIC) Program. An OIC is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax debt for less than the full amount owed. An OIC is generally accepted only if the IRS believes, after assessing the taxpayer's financial situation, that the tax debt can't be paid in full as a lump sum or through a payment agreement.
10. Check withholding - Taxpayers who have a balance due may want to consider changing their Form W-4, Employee’s Withholding Allowance Certificate, with their employer.
11. Fresh Start - The IRS has a program to help struggling taxpayers get a fresh start. Through the Fresh Start program, individuals and small businesses may be able to pay the taxes they owe without facing additional or unnecessary burden.
Nardone Law Group represents individuals and businesses in federal tax issues, including those who have fallen behind on their tax payments to the IRS. If you are struggling with tax liabilities or are interested in working with the IRS to review your a collection alternatives, you should contact an experienced tax attorney today. Nardone Law Group’s tax lawyers and professionals have vast experience representing clients before the IRS. Our experienced tax lawyers will thoroughly review your case to determine what options and alternatives are available, including the Offer in Compromise, or the Fresh Start program. Contact us today for a consultation to discuss your case.