Settle Your IRS Problem – Best Tips from Former IRS Agents
Many taxpayers get a tax refund from the IRS each year. However, if you owe tax, here are 10 free tips to deal with your problem.
Tip #1 – If you get a bill for late taxes, you are expected to promptly pay all the taxes owed including any additional penalties and interest. If you are unable to pay the amount due, it is often in your best interest to get a loan or borrow the funds to pay the bill in full rather than to make installment payments to the IRS.
Tip #2 – You can pay the IRS with your credit card. Plus you get points by using your credit card. To pay by credit card contact Official Payments Corporation at 800-2PAYTAX, www.officialpayments.com, Link2Gov at 888-PAY-1040 or www.pay1040.com. It is usually cheaper to owe the credit card company than Uncle Sam.
Tip #3 – The interest rate on a credit card or bank loan may be lower than the combination of interest and penalties imposed by the Internal Revenue Service. The IRS charges a failure to pay penalties which is in addition to the interest, which makes paying the tax even tougher.
Tip #4 – You can also pay the balance owed by electronic funds transfer (EFT), check, money order, cashier’s check or cash. The IRS loves cash (do not send cash by mail). To pay by using EFT you can take advantage of the Electronic Federal Tax Payment System by calling 800-555-4477 or 800-945-8400 or online at www.eftps.gov.
Tip #5 – An installment agreement may be requested if you cannot pay the liability in full. This is an agreement between you and the IRS for the collection of the amount due in equal monthly payments. To be eligible for an installment agreement, you must be current with the filing of all your tax returns and be current with estimated tax payments if you do not have withholding. If the tax debt is over $25,000., the IRS will require a documented financial statement, Form 433-F to be sent in and reviewed by an agent at one of the Service Centers.
Tip #6 – If you owe $25,000 or less in combined tax, penalties and interest, you can request an installment agreement using the web-based application called Online Payment Agreement found at IRS.gov. This is very simple and painless.
Tip #7. – You can also complete and mail an IRS Form 9465, Installment Agreement Request, along with your bill in the envelope that you have received from the IRS. The IRS will inform you usually within 30 -45 days whether your request is approved, denied, or if additional information is needed. If the amount you owe is $25,000 or less, provide the monthly amount you wish to pay with your request. If the monthly amount you request will pay the IRS debt in full within 60 months it will probably be allowed without completing a Collection Information Statement, Form 433-A or 433-F. The IRS will require additional information if the debt takes over 60 months to pay off.
You may still qualify for an installment agreement if you owe the IRS more than $25,000, but a Form 433-F, Collection Information Statement, is required to be completed before an installment agreement can be considered. The 433-F is used by the ACS Unit to determine your financial ability to pay. If your balance is over $25,000, the IRS will consider your financial situation and propose the highest amount possible. Fresh Start Tax can help negotiate your installment agreement. We will fight to get you the lowest payment possible based on your financial information.
Tip#8 – If an 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 incomes at or below certain levels, a reduced fee of $43 will be charged. The reduced fee is automatically figured based on your income.
Tip #9 – Make sure your withholding is adjusted so you do not have the same problem in future years.
Tip #10 – For complicated situations or high dollar cases, call a tax professional.
