With the annual tax deadline approaching on April 14th, many will see a decent return. But for those that are told you owe money to the IRS can make for an extremely stressful situation. Especially when you are told you may thousands of dollars.
When an individual owes more than 10,000K, the IRS can place a tax lien on the individuals bank accounts. This can throw a wrench into your daily finances and how you might pay your mortgage, rent and utilities all while caring for yourself and your family. You may also get your paycheck direct deposited into the account that has a lien, leaving you without income.
Typically, the IRS will work with you before such drastic measures have to be taken. The key to working out owed taxes with the IRS is to keep an open line of communication and lock into a payment arrangement. Those who ignore letters and notices may not be approved for payment plans and in turn have a lien placed on their accounts.
Payment plans also come with set up fees that can range from $30.00 to $250.00. Those who have gone through the process of owed funds to the IRS suggest individuals call into the IRS to get guidance on how to set up a payment program. Some individuals have attempted to do this on their own and have failed to file certain needed paperwork, delaying the application process and increasing interest fees for the money owed.
Some taxpayers may be able to ask for an extension when it comes to paying their debts. The IRS offers delayed collection for those enduring a financial hardship. The IRS does not grant delayed collection without penalties however. Anyone who owes back taxes is responsible for fees and interest that accrues while they make installment payments.
For the taxpayer who does not believe they owe and have already filed their taxes there is also hope. You may have used a tax preparer or prepared your taxes yourself only to learn that maybe you filed wrong or the rules have changed in your favor. It is not uncommon for the IRS to implement new rules each tax season, especially with the pandemic effecting so many families financially. Reaching out to a tax lawyer may be what you need to navigate your debts to the IRS.
The tax lawyer will charge you a large fee, ranging possibly from $2,000 – $3,000, but they may be able to get your tax debt lowered by hundreds to thousands of dollars. They can act as a middle man with tax knowledge to deal with your debt, making the situation less stressful. They may even be able to settle some of your tax debt.
The IRS does require those who are looking to settle their debts to fill out an application. There is a fee to apply but their is relief for low-income taxpayers who may have their application fees waived. Whatever your situation, there are options to decrease or manage payments to the IRS. The key is to do your research in regards to your own personal situation while keeping open communication to avoid any additional troubles.
