Back Taxes & Lack of Filings
What happens when a taxpayer has not filed taxes for a specific period of time? Regardless of how long it has been since a taxpayer has filed taxes, the first thing they should do is file all missing returns. This includes all years whether taxes were owed to the IRS or not. It is imperative that these returns are filed as quickly as possible and that the taxpayer gets a firm idea of how much they owe in back taxes.
Negotiating back tax payments
The Internal Revenue Service is ruthless when it comes to collecting back taxes. Levies on wages, tax liens on property, and a host of other possible repercussions can occur. Therefore, it is imperative that taxpayers begin negotiating with the Internal Revenue Service as quickly as possible when a taxpayer becomes aware of a deficiency in payment ability.
What options are available?
There are several options available to taxpayers who need help with tax liabilities.
1. Contact the IRS by telephone at 1-800-829-1040. Taxpayers should ask to speak with a taxpayer customer service representative to obtain information regarding back taxes and back tax filings. Taxpayers should explain the problem thoroughly and answer all questions honestly. One word of caution (offered by Nolo Law for All) is to be careful how much you disclose. Answer all questions honestly but do not elaborate;
2. File a request for taxpayer advocate assistance. The IRS provides a free service for all taxpayers that includes assignment of a taxpayer advocate. These IRS employees can help by providing information on how much is owed, what portion is taxes, which portion is penalties, and information on which tax filings (if any) are missing. The form for this request is Form 911;
3. File an offer in compromise. Taxpayers who are facing financial difficulties that are expected to last for a long period of time may be eligible for an offer in compromise. These taxpayers should review the IRS offer in compromise requirements, and if they feel they are eligible for this option, they should file the appropriate forms along with the required $150 application fee;
4. Injured (or innocent) spouse. Those who are behind on taxes as a result of lack of payment or filings by a spouse with whom they are no longer living with may be eligible for an innocent spouse negotiation. It is important to note that there are very specific requirements for this type of negotiation and the spouse (or former spouse) will be contacted by the Internal Revenue Service;
5. Installment payments. Taxpayers may be eligible to pay back taxes in installment payments. In this case, the proper paperwork will have to be filed and an agreement will have to be negotiated with the IRS to determine how much money the taxpayer has after normal expenses.
Taxpayers who are facing high tax bills, have failed to file taxes, or are unable to pay their current taxes have several options open to them. Filing taxes on time and contacting the Internal Revenue Service if there are problems can help save future issues with the IRS.
When a taxpayer is facing difficulty in paying their taxes, they need to understand how individuals can negotiate directly with the IRS. Taxpayers who are in serious financial straits should consider reaching out to local organizations which offer assistance to low income taxpayers.