What happens if you owe income taxes and don’t have the money to pay them? There is an endless stream of false advertising on tv that is done late at night that makes promises to eliminate or greatly reduce your tax debt. Well like the old saying goes, “If it sounds too good to be true, it probably is”.
When we first meet with clients that have unpaid tax issues, we recommend that they make sure their current withholdings at work are updated. Most tax issues are a result of having too little taken out of your ongoing paycheck. Updating your withholdings is critical to stopping the tax debt from getting out of hand.
For tax balances under $ 50,000, the IRS will let you set up a payment plan where you pay a set amount every month. Typically, these plans require monthly minimum payments to resolve your balance within 72 months. Interest and penalties will continue to accrue on your tax balance while you have an installment plan but at least once your plan is approved the threatening letters from the IRS will stop. If you should owe state income taxes, the state taxing agencies have a similar plan to the IRS.
If you can’t afford an installment plan or your tax balance is over $ 50,000, you may want to consider an Offer In Compromise to settle your tax balance. This process is more involved but can be successful if you timely provide the requested information. Overall, if you have tax problems make sure that you have knowledgeable professionals assisting you.
Slick advertising and grandiose promises from “National Tax Resolution” companies come with high fees and will probably not resolve your tax problems. Be cautious of who is trying to help you.