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Woods Financial Services


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October 27, 2019

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So Uncle Sam Says You Owe Money....

June 4, 2017

Nobody likes paying taxes.  Not you, not me, and especially not our President.  But what happens when you owe it and you can't pay it?

 

 

 

Well lets start at the beginning.  You filed your return, had a balance due, and didn't pay it.  In 30 days the IRS is going to send a demand notice for the amount due.  This isn't the IRS being hard asses.  The law mandates the notice and demand be sent within 30 days of the tax being assessed.

 

The worst thing you can do is ignore collections notices.  The IRS gives several opportunities to respond to their correspondence before more active collections take place.  Even then, you're given notice of any intent to file a Notice of Federal Tax Lien or Notice of Intent to Levy, and you have a couple of opportunities to appeal and contest those collection actions and offer alternatives.  

 

What are the alternatives?  

 

* Well the IRS allows you to request and obtain 120 days from the due date of a return to pay any balance due without incurring penalty.  

* If you need more time, if you owe less than $50,000 and can pay it in 84 months or less, the IRS will accept any installment agreement you submit without any supporting documentation.

* You can under qualifying circumstances settle the debt for less than you owe.  However it is difficult to make an acceptable offer and this professional rarely finds cases that are worth the time and expense of an offer submission.

* If you find yourself in a situation where after necessary living expenses, that you simply cannot make payments, you can apply to be put in a non-collectible status for a temporary period of time.

* Three years after you file the return, file for bankruptcy (with certain exceptions) and have the income tax discharged.

 

Remember, the IRS has 10 years from the filing of the return to collect the tax so they aren't going away.  Also be aware that the submission of an Offer in Compromise and filing of a bankruptcy case toll the statute of limitations to collect.

 

Bottom line, if the IRS writes, its indoor best interest to respond and bury your head in the sand.

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