When you owe the IRS, it’s tempting to hope the problem will go away. However, facing tax debt head-on can limit the cost you have to pay over time.
If you haven’t filed your taxes for several years or owe more than you can afford to pay, ignoring the problem won’t make it go away. Penalties and interest associated with failure to file and pay taxes will cause the past-due amount to increase exponentially over time. Fortunately, tax resolution services may offer a solution for those struggling with IRS issues.
Penalties for Failure to File and Pay Taxes
When the IRS owes you an income tax refund, you will not be charged a failure to file penalty, even if you don’t file a tax return for that year. If you owe taxes and do not file, however, the IRS will still assess an estimated balance. What’s more, you’ll be charged a fee of 5 percent of the past-due balance for every month you don’t file.
It’s best to file your tax return even if you think you will owe more than you can afford to pay. That’s because the failure to pay penalty is 10 times less (0.5 percent of your balance per month) than the failure to file penalty. In each case, you will be charged interest on the past-due amount in addition to the late fees.
Steps to Get Back on Track
First, file any past-due tax returns to limit penalties and fees. Once you file, you can apply for an installment agreement with the IRS. This allows you to pay back your tax debt over time without accruing fees (although the balance will still be subject to interest). In some cases, you may be able to negotiate an offer in compromise. This means that the IRS accepts a settlement for less than the full balance due and forgives the remainder.
If you need help negotiating an offer in compromise or installment agreement with the IRS, contact Geaux Tax Resolution. We have the knowledge and experience to help our clients with most tax issues by working with the IRS on your behalf. Call us at 337-240-1040 for a consultation or complete the online request form.