Hiding from the i.r.s
- By Jack Landry
- Published 04/6/2010
- Auditing
-
Rating:
Hiding from the i.r.s
Tax season has arrived one more and you suddenly realize that you do not have the funds to pay your full taxes. Many people believe the only solution to this problem is to duck and cover by hiding from the IRS.
They hope that the IRS will not penalize them until they have the funds to pay their taxes. This behavior is similar to a child who believes they are in trouble and hides under blanket believing that if they cannot see their parent, their parent cannot see them.
Hiding from the IRS is exactly the opposite of what you should do in this situation. Here are several steps that should be followed if you find yourself in this predicament.
The first step is that you should file your taxes anyway. This will save you a lot of money in penalties and interest in the long run.
The most severe punishment that the IRS deals out is failing to file. It is much better to file and not be able to pay, than to not file because you cannot pay.
The second step is to pay what you can. This will reduce the amount the IRS will hold you liable for and show the IRS that you really cannot pay and that you are not trying to scam them.
If this is the first time you have not been able to make a payment, the IRS will try to work with you to make this ordeal as easy as possible. They know you are an honest citizen and that you are trying to pay them back.
If your tax bill is less than $25,000 IRS will most likely approve you for an installment agreement. An installment agreement allows you to pay your liability throughout several months instead of all at once in April.
However, if you have not filed some of your tax returns you will not be eligible for this agreement. The IRS has dealt with millions of tax payers throughout decades and they have faced almost every financial situation that is possible.
Throughout these years they have developed various methods to work with these various financial situations. By filing and paying what you can, you are staying as up to date on taxes as is possible.
The longer you wait to set up a personal agreement with the IRS, the more you will owe them. Penalties and interest rates for not paying or filing will cease when an agreement is reached.
If you have no idea about how to come to an agreement with the IRS that will work for you, hire the help of a tax professional. A tax professional can help you file your current tax return, and others that have not been resolved from the past, if you have not already.
The tax professional will also be able to help you tailor your plea to what the IRS is looking for. He or she will provide tips and advice for your specific situation.
The tax professional will help you formulate a plan to pay back the IRS while paying as little as possible. He or she is on your side and will help you get the best possible agreement.
To reiterate the importance of filing your taxes, the IRS is improving their techniques to catch non-filers. Even if you have not filed in the past and not been penalized, they will find you eventually and then you will owe them for all of the years that you missed.
Not to mention all of the penalties and interest the IRS will impose for not paying those years. On top of this, you will not get the tax refund you would have received had you paid it on time.
The IRS system for catching non-filers is called the Information Returns Processing (IRP) System. This system also keeps track of who was employed by whom, so if you do not report a source of income, they will find out about this as well.
There are three main sources of income information that are reported to the IRS. These sources are your employer, your brokerage, the social security administration.
Other sources of this information may be a casino, unemployment benefits officials, a business partner, pension fund officials, and the IRA.
The short and long of being unable to pay your taxes is to file your tax returns anyway and pay what you can. The IRS will work with you it you are brave enough to be responsible for your mistake.
They hope that the IRS will not penalize them until they have the funds to pay their taxes. This behavior is similar to a child who believes they are in trouble and hides under blanket believing that if they cannot see their parent, their parent cannot see them.
Hiding from the IRS is exactly the opposite of what you should do in this situation. Here are several steps that should be followed if you find yourself in this predicament.
The first step is that you should file your taxes anyway. This will save you a lot of money in penalties and interest in the long run.
The most severe punishment that the IRS deals out is failing to file. It is much better to file and not be able to pay, than to not file because you cannot pay.
The second step is to pay what you can. This will reduce the amount the IRS will hold you liable for and show the IRS that you really cannot pay and that you are not trying to scam them.
If this is the first time you have not been able to make a payment, the IRS will try to work with you to make this ordeal as easy as possible. They know you are an honest citizen and that you are trying to pay them back.
If your tax bill is less than $25,000 IRS will most likely approve you for an installment agreement. An installment agreement allows you to pay your liability throughout several months instead of all at once in April.
However, if you have not filed some of your tax returns you will not be eligible for this agreement. The IRS has dealt with millions of tax payers throughout decades and they have faced almost every financial situation that is possible.
Throughout these years they have developed various methods to work with these various financial situations. By filing and paying what you can, you are staying as up to date on taxes as is possible.
The longer you wait to set up a personal agreement with the IRS, the more you will owe them. Penalties and interest rates for not paying or filing will cease when an agreement is reached.
If you have no idea about how to come to an agreement with the IRS that will work for you, hire the help of a tax professional. A tax professional can help you file your current tax return, and others that have not been resolved from the past, if you have not already.
The tax professional will also be able to help you tailor your plea to what the IRS is looking for. He or she will provide tips and advice for your specific situation.
The tax professional will help you formulate a plan to pay back the IRS while paying as little as possible. He or she is on your side and will help you get the best possible agreement.
To reiterate the importance of filing your taxes, the IRS is improving their techniques to catch non-filers. Even if you have not filed in the past and not been penalized, they will find you eventually and then you will owe them for all of the years that you missed.
Not to mention all of the penalties and interest the IRS will impose for not paying those years. On top of this, you will not get the tax refund you would have received had you paid it on time.
The IRS system for catching non-filers is called the Information Returns Processing (IRP) System. This system also keeps track of who was employed by whom, so if you do not report a source of income, they will find out about this as well.
There are three main sources of income information that are reported to the IRS. These sources are your employer, your brokerage, the social security administration.
Other sources of this information may be a casino, unemployment benefits officials, a business partner, pension fund officials, and the IRA.
The short and long of being unable to pay your taxes is to file your tax returns anyway and pay what you can. The IRS will work with you it you are brave enough to be responsible for your mistake.
Jack Landry
Jack R. Landry has worked since 1988 as a tax attorney. He has written hundreds of articles about finding a irs tax lien. Contact Info: Jack R. Landry JackRLandry@gmail.com http://www.TaxCrisisInstitute.com
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