Take Action When You Owe The IRS

Posted on 04. Sep, 2011 by in IRS

It is certainly not a comfortable position to be in when you owe the IRS for an unpaid tax bill.

Neither is it a pleasant feeling to be burdened in this manner.

You can take some solace in the fact that you are not alone … there are plenty of other taxpayers facing a similar scenario.

The Internal Revenue Service is cognizant of the situation faced by far too many taxpayers.

In very well-meant and practical advice, the agency has an extremely important message to convey to those who owe the IRS. – “The worst thing you can do is nothing at all.”

What exactly should you do when you owe the IRS?

The first thing is probably to verify that you do have an unpaid tax bill and the amount is correct.

Acting expeditiously is in your own self-interest because, in addition to the actual unpaid tax, you are accruing interest and penalties for each month that passes. This can balloon an already hefty sum that you owe the IRS.

You also want to head off the possibility that IRS will seek a lien on your property or issue a levy on your bank accounts. This does happen and can be a real headache, if not a nightmare.

What you can now do depends on the amount in question. But always keep in mind that you can save yourself money by paying off the debt you owe the IRS as fast as possible.

For taxpayers unable to resolve their tax debt immediately, an Installment Agreement is a reasonable payment option. Such an agreement allows for the full payment of the amount you owe the IRS in manageable amounts.

So, for example, if the sum in question is $25,000 or less in combined tax, penalties and interest, there is an Online Payment Agreement (OPA).

A very important point is that if you recently filed your federal income tax return and owe the IRS but have not yet received a bill, you can use the OPA to establish an Installment Agreement on current year returns.

If the tax bill is more than $25,000, you may still qualify for an Installment Agreement but Form 433F, Collection Information Statement, must be submitted.

While all of this is on your plate, you should also give careful consideration to retaining the services of either a certified public accountant (CPA) or a tax attorney.

It is not the end of the world if you owe the IRS, but you must be sure to act.

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