Some of the most frequently asked questions by taxpayers who owe money to IRS have been discussed below in this post:
How To Deal With What You Owe To The Irs?
What happens when you can’t pay what you owe the IRS
What If You Can’t Pay Your Taxes?
Do You Know, How Much You Owe In Irs Back Taxes?
How to negotiate back taxes with IRS?
How To Set up an IRS Payment Plan?
What is Internal Revenue Service (IRS)
Internal Revenue Service (IRS) is the government agency of United States government responsible for the collection and enforcement of taxes.
What Are IRS back taxes?
In United States of America majority of the Americans manage to get tax refund in the end of the year. There are many of them who owes money to the IRS, because they have not paid the taxes since long and now they are burned with heavy debt. This debt towards IRS is termed as back taxes. A qualified professional tax attorney will be able to guide you in your negotiation with IRS and helps you to away with your debts.
Whatever deal you strike, follow the terms down to the letter. Because if you miss a payment you’re considered in default and then “the gloves come off,” said David Levine, Groom Law Group, Chartered, Washington, D.C , now an enrolled agent in Reno, Nevada.
If you want know how much amount you owe to IRS in back taxes it will depend on whether the tax relates to returns you have already filed or relates to returns still required to file. In one way or the other you can calculate accurately what you owe even without contacting IRS, no doubt at some points you have to contact the agency for payment.
There are different steps to be follow by you if you want to be more clear how much you owe IRS in back wages.
- Obtain copies of all tax returns in respect of which you still owes taxes: The first and the foremost thing you require is to gather all of your relevant returns and documents that relate to each year you still owe back taxes for. Each of your tax returns will report the amount of tax you owe, but never paid. If you have filed the return and the copy of the return is not available, you can collect it from your accountant and if the return has been misplaced, you can apply its copy to the IRS.
- Past due tax returns must be filed by you: If you have not filed the returns previously to which your back taxes relate, in such cases you have to prepare your back returns for calculation of the amount you owe each year. However, when you do, you must use all tax forms for the year you are filing.
- What are your interest and penalties you must calculate: Whether you have filed the tax return or not or you are filing it for the first time, it is necessary that you must increase your tax bill for the interest and penalty charges the IRS impose on you when you paid the taxes late. Calculating your interest and penalties will provide with you with more accurate estimate of what you need to pay.
- Pay your back taxes: When it is determined by you how much you owe to IRS, it will be better to make the arrangement for payment at the earliest. At minimum, your outstanding back tax balance will continue to accrue interest each month it remains unpaid.
If the amount you owe is significant and you are unable to make a lump-sum payment, you should contact the IRS to work out a payment plan. Once your installment plan is in place, you can avoid more severe collection enforcement by the IRS as long as you adhere to all terms of the agreement and make each payment on time.
IRS Fresh Start Program
The IRS Fresh Start program makes it easier for taxpayers to pay back taxes and avoid tax liens. Even small business taxpayers may benefit from Fresh Start. Here are three important features of the Fresh Start program: IRS has announced new policies and programs to help taxpayers pay back taxes and avoid tax liens.
11 Tips For Taxpayers Who Owe Money To The IRS.
As stated before, it is never advisable to ignore or hide from the IRS when you’re unable to pay. In fact, the IRS may be more willing to work with you than you think. If you’re unable to pay your tax liability in full, your best option may be to request an installment agreement.
Also known as an IRS Payment Plan, this arrangement allows you to pay your tax debt over a period of time (up to five years in some cases), depending on the type of tax debt and how much you owe. If you’ve received a notice from the IRS, your first step should be to respond by following the instructions included with the notice. Usually the IRS will instruct you to contact them by phone or mail. You will then receive further instructions and have the opportunity to request an installment agreement.
Always file your return
- If you owe any sum to IRS which cannot be paid by you in one lump sum with return, still you have to file return as it will reduce your penalties. Some time client tells to their attorney that they have not filed the return as they have no sufficient money to file the return. But they are wrong, as filing of return will make them liable for fewer penalties than in not filing the return.
Should deal with these matters in a proactive manner
- You should deal with this matter actively. IRS will not take action against you promptly regarding tax penalties. It will take months before they take action against you. At first instance whatever letters are generated it is merely computer generated statements. But with time strict action will be taken against you and before that stage comes, you should pay your outstanding debts. Otherwise your image can be damaged and it make effect you financially.
Prefer to go for installment agreement
- The IRS provides the option to make payment by way of installment agreement or by way of offer in compromise. Under the installment agreement the tax payer pays the amount due over a period of time and in offer in compromise taxpayer has to pay once in a lump sum, an amount which is less than the amount actually owed. It is not necessary that IRS will accept installment agreements of offer in compromise it all depends upon the financial condition of the tax payer. You may request an installment agreement if you cannot pay the liability in full.
- This is an agreement between you and the IRS to pay the amount due in monthly installment payments. You must first file all required returns and be current with estimated tax payments. If an installment agreement is approved, a one-time user fee will be charged. The user fee for a new agreement is $105 or $52 for agreements where payments are deducted directly from your bank account. For eligible individuals with lower incomes, the fee can be reduced to $43.
Additional time to pay
- If you fill out the fill out Form 9465— or better yet, simply go to www.irs.gov and fill out an online payment agreement application (, you’ll find out right away if you’re eligible; going the snail-mail route generally takes 30 days or longer. If you owe $50,000 or less and can pay what you owe within six years, you can get a payment agreement, according to the IRS.
Be regular in your payments
- Be stick to the routine in the payment of your installments. If at any time divert from this routine IRS may impose heavy penalties on you or can seize your property and may freeze your bank accounts also. If you get a bill this summer for late taxes, you are expected to promptly pay the tax owed including any tax penalties and interest.
Always take the help of professional
- Professional will be always helpful to you in bringing negotiation by way of Installment agreements or offer in compromise. If any one of you are facing any problems our dedicated IRS tax attorney San Diego offer experienced negotiation with IRS to erase your outstanding debts.
Credit card payments
- You can pay your bill with a credit card. The interest rate on a credit card may be lower than the combination of interest and penalties imposed by the Internal Revenue Code.
Electronic Funds Transfer
- You can pay the balance by electronic funds transfer, check, money order, cashier’s check or cash. To pay using electronic funds transfer, use the Electronic Federal Tax Payment System
Online Payment Agreement
- If you owe $25,000 or less in combined tax, penalties and interest, you can request an installment agreement using the Online Payment Agreement application at www.irs.gov.
Collection Information Statement
- You may still qualify for an installment agreement if you owe more than $25,000, but you are required to complete a Form 433F, Collection Information Statement, before the IRS will consider an installment agreement.
- Taxpayers who have a balance due may want to consider changing their W-4, Employee’s Withholding Allowance Certificate, with their employer. A withholding calculator at www.irs.gov can help taxpayers determine the amount that should be withheld.
Helpful Resources For Taxpayers:
Publication 594, The IRS Collection Process ( PDF)
Publication 966, Electronic Choices to Pay All Your Federal Taxes ( PDF)
Form 9465, Installment Agreement ( PDF)