As the IRS is known for their persistence in collecting taxes, having to owe them money is often a daunting prospect.
Fortunately, there are several ways to rid yourself of debts. However, despite the prevalence of tax relief solutions, many taxpayers inadvertently take the wrong approach.
Here’s what NOT to do if you owe money to the IRS.
Do NOT Ignore Your IRS Tax Debt
Again, the IRS will not back down if there’s money to be collected. Ignoring your debts will worsen your situation by piling on the interest rates and penalties.
Do NOT Not File At All
Many acknowledge that they owe the IRS money but choose not to file because they’re already behind on paying. What they might not know is that the IRS charges a 5% penalty of the amount you owe for each month your file is late, up to 25%. Even if you owe on back taxes, you will avoid owing exorbitantly more if you stay on top of your filings or at the very least file for an extension.
Think You Should NOT Pay Because You’re Already Behind
There are penalties for failing to pay – .5% of the balance each month you’re in debt, up to 25%. You should pay as much as you can even if you can’t cover the full bill to avoid these compounding penalties.
Fail to Set Up a Payment Plan
Setting up a payment plan or an offer in compromise could help you skirt penalties. Alternatively, a bank loan or credit card might be the cheaper option. Compare your payment options to see how much you will end up paying in the long run.
Assume You Have Reasonable Cause
The IRS will accommodate you if you can show you can’t cover your payments in full by the deadline. The key is that you have you to prove it. If you prepare the necessary documents, Uncle Sam may give you a break.
Sacramento Taxpayers: Contact Paramount Tax Relief For Tax Debt Relief
If you need tax debt relief, our team of tax professionals is here to help. We’ve helped countless Sacramento taxpayers get a hold of and eliminate their tax debts. To help you get started, we’ll provide you with a free tax consultation when you call.
If you any questions about handling IRS debts, don’t hesitate to reach out to us at Paramount Tax Relief.
