You just received you tax return and can’t pay the balance due in full. What do you do?
- FILE YOUR RETURN ON TIME. This avoids the penalties for late filing.
- RESPOND TO ALL NOTICES. “Do Not” ignore the taxing authorities.
- Pay as much as you can when you file the return. The outstanding balance is subject to interest and late payment penalties. Paying as much as you can will minimize these charges.
- The IRS will give you up to an additional 120 days to pay in full. Interest and penalties still continue to accrue.
- If you can finance the full balance, the interest charged by your bank or credit card company is usually less than the combination of interest and late payment penalties.
- You can enter into an installment agreement with the IRS and state taxing authorities. There is a one-time user fee to set up the IRS installment agreement. The installment payments can be made by a variety of methods:
o Direct debit from your bank account;
- Payroll deduction from your employer;
- Payment via check or money order;
- Payment by Electronic Federal Tax Payment System;
- Payment by credit card via phone or Internet; or
- Payment by Online Payment Agreement.
- If your liability cannot be satisfied through any of the methods listed above. You may, repeat may, be eligible for an Offer in Compromise due to doubt as to collectability if your assets and income are less than the full amount of tax liability. The IRS is stingy in accepting Offers in Compromise, and as such; they should be viewed as a last resort.
As always, this is only meant as a brief overview. If you feel that we can be of further assistance to you, please contact our office to set up an appointment.
Email us at: info@dohertyandassociates.com
Call us at: 302-239-3500
Visit our website: http://dohertyandassociates.com
– Doherty & Associates Team