It is never great news to discover that you owe taxes to the IRS. It is even worse when you are unable to make the required payments. If you are in a difficult financial situation due to unforeseen circumstances, you should contact the IRS as soon as possible before they start their collection actions.
UNDERSTANDING IRS TAX PAYMENT PLANS
The IRS generally accepts various payment plans if you cannot full pay the total balance owed. The most basic tax payment plan is a streamline payment plan. The IRS usually gives taxpayers 72 months to pay off their back taxes. If the individual cannot fulfill the required payments within that timeframe, he or she needs to disclose their financial information and pay the disposable income amount. It is recommended that you work with a tax debt resolution specialist when handling tax related documentation.
Before we proceed, you should realize the importance of paying your taxes on time. If you do not fulfill your IRS tax payments by ignoring the tax bills and avoid setting up a payment plan, the IRS can take the following actions:
Tax liens: The government can claim your personal property and assets by placing a tax lien on them. A lien does not involve an actual seizure and is generally issued if you owed more than $10,000 in unpaid taxes.
Tax levies: If you ignore the lien notices, the government may seize your property. Your car, home, wages, and funds in your bank account may be seized.
You create tax problem when you don’t submit your income tax returns with the IRS. After disregarding lots of notices to submit tax return, the IRS/state is going to inevitably prepare one for you, named as Substitute for Return (SFR).
The IRS/State utilizes income that has been actually mentioned to them, like wages, interest income, subcontractor payments sale of property and so on and then presumes you are single, have no dependents, and makes use of the standard deduction.
Currently you have a tax bill or larger tax bill assumed, although you failed to file a tax return. You additionally have produced other issues. You cannot receive an installment agreement without submitting the missing returns, even the SFR's. You cannot submit an Offer in Compromise if there are actually missing returns. Bankruptcy will not get rid of old years if those returns were not submitted by you. And the IRS/State will proceed to attempt to collect on the SFR billings.