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IRS PAYMENT PLANS AND SETTLEMENTS

  Owing Money to the IRS

There are several ways you can end up owing money to the IRS:

• Filing a tax return that shows amounts owed but not sending in the payment at the time of filing;
• Never filing the tax return so the IRS files the return for you based on the income information reported to them;
• Having a tax return examined and deductions disallowed or additional income found;
• Filing a tax return but failing to include all the income reported to the IRS for you.

Although the original amount of the tax may be small, the accrued interest and penalties can double or even triple the amount due.

  How the IRS Can Collect

The IRS collection process can be lengthy but is thorough. After the delinquency notices are sent, and if payment has not been received, the IRS will levy your bank account, put liens against assets and garnish wages. If these actions don’t satisfy the debt the IRS can seize all assets you may have which they will auction off.

  Satisfying the Debt

Borrow: If you agree with the amount the IRS says you owe, there are several ways to satisfy an IRS debt. Borrowing money from another source, such as a family member or bank would be ideal. The interest would be far less and the IRS notices and collection actions would cease.

Monthly Payments: Another option is to pay the debt by monthly installments. The IRS must approve the payment plan. The interest will still accrue while you are paying your monthly payments. Specific IRS forms must be prepared, and all unfiled tax returns must be filed before the request can be sent in. Additionally, you must continue to file all tax returns, the monthly payment and all taxes on time, otherwise the IRS will cancel the installment plan.

Settlements: Lastly, if you cannot make monthly payments large enough to satisfy the debt, or if there is doubt as to whether or not you owe the tax, a knowledgeable tax Preparer can arrange to have the amount due reduced by offering a settlement. Again, specific IRS forms need to be prepared and all unfiled tax returns must be filed prior to submission of the request. You must stay in compliance with the IRS (meaning file all tax returns and pay all taxes on time) for five years after the offer has been approved otherwise the IRS can cancel the settlement and you will owe the entire amount plus accrued interest and penalties.

  Disagreements with Amounts Due

If you disagree with the amount the IRS says you owe a knowledgeable Preparer or representative can review your case and determine if the amount can be corrected or reduced.

There are many Tax Laws, IRS Code Sections and Treasury Regulations regarding assessments of additional tax, the collection process and how to satisfy debts with the IRS. Hire someone well versed in this area so you get the best possible solution.

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Total Tax Solutions, Inc.
Email: info@totaltaxsolutions.com
Voice: (818) 352-0384       Fax: (818) 352-8684
Post Office Box 10865 Glendale, CA 91209-3865