Posted by Carmen Garcia

How to Resolve Unpaid Taxes.

How to Resolve Unpaid Taxes.

When it comes to taxes, people often make mistakes which are quite normal. However, when these mistakes lead the IRS to perform audits of your business or personal assets, repaying them can be a burden. While it is required by the IRS that you pay your taxes in full, circumstances may prevent you from doing so, but if your taxes aren’t paid in full the IRS will charge a penalty. No need to worry, however, because there are different ways for you to resolve this issue. To learn how to resolve your tax debt, read the guide below and begin paying the IRS the money you owe Uncle Sam.


The best solution should always be to pay off all past due amounts as quickly as possible as the penalties and interest will continue to grow until your balance is fully paid off. The IRS does not waive these late fees even if you set up an approved payment agreement.

Other ways you can resolve these debts are by applying for a payment agreement.


Short-Term Extension:

You may be eligible for a short term extension if you owe the IRS less than $100,000. You can call the IRS at 1-800-829-1040 or apply online to establish your request to use this option. With a short term extension, you have 120 days to pay in full, with no fees added.


Monthly Installments:

This option lets you pay gradually with monthly payments over a period of time for up to 72 months. With monthly installments, you have the option to clear your debt using checks, credit card, direct debit, money order or payroll deduction. After you make a payment you will receive an IRS notice that will show your remaining balance and the detail of your next payment.


Offer in Compromise (OIC):

This option allows you to settle your IRS tax debt for less than what you owe. If you pay a portion of your taxes right away the IRS may agree to drop the remaining balance; however, using this option comes with some strict eligibility requirements as well as a $186 non-refundable application fee. Your application will be rejected if you are able to pay your full tax debt through an installment plan or short term extension.


Request a Temporary Delay of the Collection Process:

If the IRS detects that you are unable to pay your tax debts then your account would be reported as “currently not collectible.” It means that the IRS will delay the collection until your financial situation improves, but it will not reduce the amount you owe to the IRS. It means that the IRS has decided that you are currently unable to afford payment at this time. As a matter of fact your tax debt will continue to increase because the IRS penalizes unpaid taxes and adds interest until you pay your balance in full. You can however request a temporary delay of collection by contacting the IRS or by calling the phone number shown on your tax returns. Before you submit a Collection Information Statement and provide proof of your financial status, you must provide samples of your income, assets, and expenses. You should always consider and keep in mind that the IRS may file a ‘Notice of Federal Tax Lien’ in a period of temporary delay, in order to protect the interest of your assets.


Request an Extension of Time to Pay (Undue Hardship):

The IRS has a Fresh Start initiative, which is available to eligible individuals who may request an extension of time to make their late payment penalties waived off. This option is only applicable and reserved for regular taxpayers who may experience Undue Hardship if they are forced to pay their taxes by the due date. It will apply to the tax shown on your tax deficiency which is the amount you owed after your return is reviewed by the IRS. The term ‘Undue hardship’ means, more than being an inconvenience according to the IRS. You must give proof that if you were to pay your taxes on the due date you would suffer a significant financial loss. For example, if you have to sell your property at a loss in order for you to pay your taxes that would be considered as ‘Undue hardship’.  You must always give valid reasons for your extensions and provide a detailed explanation. If your extension is approved by the IRS then they will give you up to six more months to pay the taxes shown on your return or up to 18 months to pay a tax deficiency.


If you have trouble paying your taxes, you may need to hire the services of Carmen Garcia. Tax professionals such as Carmen Garcia provide delinquent taxpayers with valuable information and advice on the process they should take to avoid being penalized too harshly by the IRS.


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Carmen Garcia
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