What should you do if you owe money to the IRS? Here are some tips that can help you deal with the situation.
Knowing that you owe money to the Internal Revenue Service or IRS can be very stressful, especially since this kind of debt can follow you around indefinitely. So, what should you do when you find yourself under such a situation?
First, you need to maintain your calm so that you can plan your course of action. Remember, panicking won’t do you any good. You are not the only person who owes money to the IRS. There are even celebrities who owe money to the IRS. You are not the first and won’t definitely be the last. After you have cleared your mind, here are some things you may want to consider to deal with the situation.
Tips in Dealing with the IRS
File your returns on time. This can help you can avoid additional fees, penalties and interest. Don’t make the serious mistake of not filing your return just because you can’t afford to pay your tax bill on time.
Try to pay the bill in full. If you can get a loan to pay for your taxes, then consider doing it. You can also use your credit card to pay for your tax bill since the interest rate that you will incur by doing so will still be lower than the combined interest and penalties imposed by the Internal Revenue Code.
Request an installment agreement. If you cannot pay your taxes in full but owe less than $25,000 in outstanding taxes, consider requesting for an installment agreement by completing IRS Form 9465 and mailing it to the IRS. However, if you owe outstanding taxes to the IRS in excess of $25,000, you should send a completed Form 433-F (Collection Information Statement) along with the other required documents.
Keep to your promise. If the IRS approves your request, make it a point to keep up with your monthly installment payments. Otherwise, the IRS will come after you, demand that you pay for the full amount and hit you with higher penalties and interest rates. But if you really cannot pay the monthly installments as per your agreement, you should let them know about your situation so that they can provide you with some other options to help you settle your debt.
Consider getting some expert help. Get proactive solutions to your problems by consulting a representative of the Taxpayer Advocate Service or TAS, an independent organization within the IRS that helps people resolve their tax payment problems. Now, if you have explored all your options but are still unable to pay your outstanding taxes, consider hiring a lawyer to see if you can reduce the amount you have to pay.
If you honestly want to pay your taxes, the IRS would be more than willing to provide you with a number of options can help ease your burden. Always remember that.