Without fail, every tax season we talk to someone who has a tax bill that they cannot pay. Without fail, outside of tax season we talk to someone who didn’t file their taxes because of a tax bill they cannot pay.
When hearing of someone with a large tax bill they cannot pay, many people’s first reaction is, “Didn’t they know they had to pay taxes?” Quite often it is the case that these people were aware they had to pay but didn’t have the means to do so. Some then just push it to the side and hope it never catches up to them. Others intend to pay, never quite get the funds to settle the bill, then decide to not file taxes the next year because of it, and things continue to snowball.
There are a couple things to keep in mind in this situation. One is that the chances you get away without paying are very small. If you received a W2 or a 1099 that says you earned money during the last year, the IRS also received a copy of it. If you owe them money because of it, the agency knows that, too. A second thing to remember is that if you then don’t file taxes, it doesn’t mean it’s going to take longer to catch up to you. The agency will then also know you didn’t file and slap you with extra fees for not filing on top of those for not paying.
No matter what you think about the justice of the tax system, it is not wrong for the IRS to want the money that it is owed. It’s therefore not surprising that the agency recently put out a release that speaks to all the ways you can pay your tax bill. This isn’t bad information to have overall, but issues with nonpayment rarely involve simply not knowing how to get your money to the government.
Lower in that release, though, is some information on what you can do if you have a tax bill you cannot pay. Maybe it shouldn’t be too surprising that the IRS gives less space to these topics than what you can do to simply pay your debt in full but be aware that these things do exist.
Sure, there will be some fees and interest involved when you don’t pay a bill on time. There are ways to get a plan in place immediately, though – and thus minimize that extra money that you have to pay – and there is a lot to be said for the peace of mind that comes with that.
The more you owe, the tougher it can be to gain that peace of mind. Again, however, the sooner you start to move forward on making a plan to do it, the sooner the worries go away. What tactics are the best to use will depend on your situation, so I can’t give a roadmap here for how it would happen. If you want to know how things could be handled for that tax bill you didn’t think you could pay, though, please don’t hesitate to contact us and make an appointment.
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To ensure we don't make the folks at the IRS ornery, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.