Delinquent Returns – Tips for Dealing with the IRS
Dealing with the IRS is stressful.
Unfiled returns, unpaid taxes, and dodged notices will get you in serious trouble from the IRS. However, there are a number of things you can do to improve this situation.
Failing to act can result in a number of hefty fines (a 5% monthly penalty for failing to file!), flagged accounts, and added stress.
Confirm Exactly What the IRS Needs
If you are receiving a notice from the IRS, it is likely an indication that you owe back taxes. Be careful when reading the notice that was issued as it will specify all the details of the claim. The notice will include exactly how much you owe, from what tax year it is owed, and the payment due date.
The notice will also include a step-by-step guide on how to proceed with paying and who to contact if there are any concerns.
Get Help
Once you’ve received a notice from the IRS about back taxes its best to contact a professional for help. Contacting a professional advisor, like us here at AP Accounting and Tax Services, can alleviate some of the stress of handling the matter on your own.
Professional accountants will also be better equipped to navigate the tricky tax system as they’ve been working in the field for years. Not only will these professionals be able to tell you exactly what you should do as your next step but they will complete a personal assessment. This is done by looking into your accounts to determine what the best option will be for you.
The professionals can also head through all of your old paperwork, accounts, and tax filings to confirm that the notice is accurate and ensure all your filings are in order.
File Even if You Can’t Pay
A late tax return is expensive. Plus, the IRS does not take dodging the filing system lightly and will hit you with a number of penalties for not filing for a year. Oftentimes, the penalty that is issued for failing to file is more than the fine for a failure to pay. (late filing is 5% of unpaid taxes for each month late whereas the penalty for late payment is %0.5 for each month late).
Therefore, we highly recommend filing the return to avoid the hefty fee that you will incur. Otherwise, you may end up owing more than originally thought.
Request an Extension
If you are struggling to meet the deadline set out by the IRS you might want to consider requesting an extension. It is best to speak with a professional that can advise whether or not this is possible for your situation. If it is, they can begin the process by filling out Form 4868 with you to ensure that it is handled correctly. Keep in mind that an extension will only prolong the filing deadline, but not payments.
Communicate Openly
The IRS hates being ignored. The more that you actively dodge notices and avoid payments the more trouble you will be in!
Therefore, if you already are aware that you are not able to file, pay, or meet the deadline that they’ve specified, you need to contact them immediately. This process should also be discussed with a trained professional who will know exactly what to say when discussing your options.
Some compromises that the IRS may suggest are monthly payment plans. The IRS is usually willing to work with people who have filed all their required returns but who simply can’t pay it. Long-term payment plans are typically offered for those who owe less than $50,000 (in taxes and penalties), whereas short-term options are available for those who owe up to $100,000.
Notices from the IRS should not be taken lightly. If you’ve received one it’s critical that you act quickly and correctly. Otherwise, you could end up with costly fines, high penalties, and sky-rocketing debt. If you’d like more information on this topic get in touch with a member of our team today.
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