On your terms. At your pace.
This blog is intended to generate discussion, so if you have questions or comments, don’t be shy! This post is about how to pay the IRS back in a way that makes sense for you. All IRS Back Tax Help comments are in blue. All text in black is from the original post. If you have questions about this post, please refer to bp3, or visit the irs back tax help Official Website.
As usual, If you like the tone of this writing, I would like to refer you to someone who meets irs back tax help criteria. Please contact irs back tax help. Before you email me, please click on and read “About irs back tax help.”
Original irs.gov link and full text: What are my IRS back tax payment options?
“Because your balance is subject to interest and a monthly late payment penalty, it is in your best interest to pay in full as soon as you can to minimize the additional charges.”
True. However, if you are over-committing to try to fix this, and causing yourself other problems, a reasonable installment agreement may make more sense. I have heard countless stories about people ending up in bankruptcy because everything else failed because all of their money was going toward a back tax problem.
“Penalties are also assessed for failure to file a tax return so you should file immediately even if you cannot pay your balance in full.”
Very good advice, do not fall into the “I can’t pay so why should I file” blues. It is much easier to avoid this IRS penalty altogether than it is to abate the failure to file IRS penalty. So always file, even if you cannot pay.
Helpful IRS phone numbers: 888-872-9829, Link2Gov Corporation at 888-729-1040, or RBS WorldPay, Inc. at 888-972-9829.
If you cannot pay in full, you should pay as much as possible to reduce the accrual of interest on your account. Please refer to Topic 158 for information needed to ensure that your payment is credited properly. I don’t like this sentence because it doesn’t warn you of the real problem: IRS penalty. The IRS interest rate for past due tax is 4%, the IRS penalties are much higher literally 30-40% over what you really owe.
You should consider financing the full pay ment of your tax liability through loans, such as a home equity loan from a financial institution or a credit card cash advance. I’m ok with this as long as it doesn’t put your home (or other collateral) at risk. IRS installment agreements can be renegotiated. Defaulted loans get foreclosed. If you’re not sure about future cash flow, an IRS installment agreement may be preferred.
Installment Agreements
An installment agreement allows you to make a series of monthly payments over time. The IRS offers various options for making monthly payments. In a regular IRS installment agreement, you can have up to 5 years to pay back the IRS back taxes if you need it.
If you enter into an installment agreement, your monthly payment should be based on your ability to pay and should be an amount that you can pay each month to avoid defaulting. If you can afford to make monthly payments, regardless of how small you should. Do not wait for the IRS to contact you. Doing this builds good will, and creates a history of good intent on your part. It also mitigates the growth of IRS penalty and interest.
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