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Frequently taxpayers are unable to pay taxes due. This can happen on their Form 1040 U.S. Individual Income Tax Return, their State Income Tax Return, or both. Though it is suggested and encouraged that taxpayers pay as much as possible to avoid penalties and interest, this is not always possible for all taxpayers.

If a taxpayer is unable to pay the liability owed, they should contact an experienced tax lawyer. When you begin to correspond with the IRS, they will ask for documentation and forms to be filled out, and will try to negotiate payment plans with the taxpayer. The process is difficult, especially since IRS Agents are experts in the Tax Code. By working with an experienced tax lawyer, you can have your own agent who works with the IRS on your behalf and explain your situation. An experienced tax lawyer can negotiate with the IRS and may serve to reduce the amount owed.

After working with the IRS through a tax lawyer, the taxpayer could qualify for a payment option. Based on the individual circumstances for each taxpayer, an agreement can be made for the taxpayer to pay in full within 60 or 120 days. The IRS offers these agreements to help tax payers pay tax debt in full. A taxpayer can request an agreement length of either of these amounts. It is advised to try to enter into this payment option because penalties and interest incurred will be less than if a taxpayer entered into an installment agreement.

If a taxpayer is unable to make a payment in full within the 60 or 120 day periods, the IRS will still want to collect on the tax debt owed. The IRS will most likely request Form 433-A or Form 433-F, Collection Information Statement. This form requires full disclosure by the taxpayer of all checking accounts, savings accounts, investment accounts, retirement accounts, safe deposit boxes, vehicles owned, valuable personal property, land owned, monthly expenses and monthly income. If the taxpayer is a business owner with business tax debt, the agreement requires bank accounts, tools, machines, equipment, business vehicles, business property, and monthly business expenses. By collecting the appropriate data, your tax lawyer will be able to find the amount you will be able to afford to pay the IRS monthly, while still being able to maintain your life.

If taxpayers are unwilling to prepare the documentation for Form 433-A, they could repay a tax debt through bank loans, borrowing from family, liquidating assets, or equity in assets, and paying in full.

The main job of the IRS is to collect money owed by taxpayers. The agency is reasonable and understands that not all tax debts are easily paid off. Working with the IRS can be challenging, especially if you are not knowledgeable of the Tax Code and all of your payment options. By contacting an experienced tax lawyer, the pressures of negotiating and working with the IRS for the best payment option are greatly reduced.

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