Solutions for the Flabbergasted

January 21st, 2013 by admin

Like being in debt to a loan shark, being in debt to the IRS is a situation that no one hopes to find themselves in. However, life has a way of throwing us curves sometimes. Whether you underestimated your income for the year, miscalculated your exemptions, won a bunch of money on a Las Vegas vacation and excitedly forgot to set aside tax money before spending it all, your accountant failed to pay payroll taxes for your business — whatever the reason that you owe the IRS — it’s something that you don’t want hanging over your head.

The thing to remember about IRS debt is that it doesn’t go away. If you owe, they will collect one way or another. Unlike other debts, which in most states are cleared after a company fails to conduct any collection activity for four years, IRS debt stays good for 10 years or more.

Taking Care of IRS Debt That is Too Large to Pay Off

If you find out that you’ve underpaid the IRS or end up owing them for some reason, then you want to pay it off right away if possible. If the debt is simply too large for you to knock off all at once, then there are a few things that you’ll want to consider.

First, how much do you owe? If it’s less than $25,000 then you can request that the IRS accept monthly payments by filing a simple form. Second, how much can you afford to pay all at once? Third, how much of a monthly payment can you afford?

If you owe less than $25,000 AND you can afford monthly installments that will pay off the debt in its entirety within three years, then you can file a Form 9465 and attach it to your 1040. If you owe more than $25,000, then it requires that additional forms be filled out.

If you find that you won’t be able to pay off your debt within three years, then it’s time to seek some professional help. Seek out the advice of a professional right away before you get into even more trouble with the IRS.

Other IRS Problems

Some other common reasons you might want to consider the advice of a professional for should you get into hot water with the IRS include:

Not Filing a Return — If you failed to file a return for one or more years, then the IRS is going to make assumptions about what you owe them.

Payroll Tax Issues — Owning a business with employees means you are required to withhold income tax from each one. If you miscalculate or end up spending that money, then you can get into heaps of trouble when the piper comes to collect.

Bank Levy/Wage Garnishment — If you have failed to pay a past debt, the IRS might levy your bank account and/or garnish your wages.

In all cases where you feel like you’re in over your head and simply aren’t sure what to do, a smart choice is to turn to an accountant or tax attorney that can help you get things back in order and even help you in negotiations with the IRS.

by: artgib |