Tax Owed To IRS Can Be A Headache

Posted on 28. Sep, 2011 by in Back Tax Returns, Back Taxes, Filing back tax returns

There is no question that any tax owed to IRS can mean trouble, both small and big.

The problem can be contained if a delinquent taxpayer heeds the sage advice of the Internal Revenue Service. “The worst thing you can do is to do nothing,” according to IRS.

So what can lead to a situation where there is tax owed to IRS?

If you don’t pay tax by the due date, it’s possible you will be faced with a failure-to-pay penalty.

Filing a federal individual income tax return late usually means there will be a penalty of 5 percent of the unpaid taxes for each month or part of a month that the return is late. There is a cap of 25 percent of your unpaid taxes.

You can already begin to see how a bit of inattention or negligence can create a problem involving tax owed to IRS.

If you delay filing your return more than 60 days after the due date or the extended due date, there is a minimum penalty of either $135 or 100 percent of the unpaid tax, whichever amount is smaller.

Should you fail to pay your taxes by the due date, there is usually a failure-to-pay penalty of ½ of 1 percent of the unpaid taxes for each month or part of a month after the due date that the taxes are unpaid.

The agency will work with a taxpayer when there is tax owed to IRS.

For example, there are possible options involving an Installment Agreement or an Offer in Compromise. However, while IRS’s explanations of these options may be clear, to many taxpayers these alternatives are shrouded in clouds.

What is probably your best option if you have tax owed to IRS?

There are simply times when paying for the services of a tax professional, whether it be a certified public accountant (CPA) or a tax attorney, is a wise expenditure.

You can take your “tax owed to IRS problem” to someone who, by education, training and experience, knows what to do, where to do it, and when to do it.

Waiting and just hoping for the best is certainly not the right approach when there is tax owed to IRS.

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