If you are in the position of owing taxes to the IRS, you probably are feeling a bit overwhelmed. The IRS has a reputation that is rather frightening to the average person. But before you take any drastic measures, it is important for you to find out all you can about the various avenues that may be open to you. Once a person is informed, you have some leverage in dealing with your past taxes and will be better able to negotiate with the IRS.
The first thing you need to do is file your taxes. Even if you are late, file them anyway. They don't just go away if you pretend they don't exist. This is perhaps the worst mistake many people make. After they are filed, you at least have something to negotiate with.
If you know that you owe the money and you are not in a position to pay it in full, offer to make installments. The IRS is usually pretty good about accepting these types of payments because they want their money. You will need to bear in mind that the interest and late penalties do not go away but will continue to add to your account.
If you honestly believe that you will never be in a position to pay your taxes then you should find out about an OIC which stands for an Offer in Compromise. These are not easy to obtain. In fact, the IRS will only accept about 25% of all the OIC offers that it receives each year. In order to qualify for this, you must be able to show one of several different things:
* You doubt that the tax is correct. This takes more forms and the expertise of a professional if you believe this might apply to you.
* There is little likelihood that the tax owed will ever be able to be collected given your current and projected future circumstances. Even if you were to liquidate all of your assets, you still would not have enough money to pay the bill. Another case might be with catastrophic health concerns or expenses. However, any case must be able to be proven to the satisfaction of the IRS.
* If you were to pay the tax, it would cause extreme financial hardship. In other words, you would not be able to have enough money to provide the daily needs of your family.
The best way to use any of the above methods is to visit with a tax attorney or professional. You will need their expertise to guide you through the process. Also, be sure that you understand what the tax law is to the best of your ability. In these cases, knowledge can be a powerful ally in your corner. The bottom line is don't put off your taxes. This will only hurt you in the long run.
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