Does Your Tax Return Show an Amount Due?
When you have a balance due to the IRS, it is imperative for you to immediately begin to take steps to arrange for payment. Most of the beginning steps of the IRS collection processes are computer automated. The computer will continue marching through each phase of the collection process unless you take action to have the process placed on hold.
If your tax return shows a balance due, the IRS will charge you a penalty of 4.5% of the balance due for every month or partial month that the return is filed late, up to a total late filing penalty of 25% of the balance due. If you owe the IRS and can’t pay your tax bill, you’ll save a substantial amount of penalties by filing the return on time, or by filing for an extension of time to file.
If the IRS finds discrepancies on your tax return, the first notice that you will receive is usually a Notice of Math Errors. Don’t be fooled by the name - the notice covers a large variety of tax preparation errors, such as choosing the wrong filing status or an incorrect social security number. Quite often the Notice of Math Errors is not correct, so the first step for dealing with any balance you owe the IRS is to be certain of the amount of tax that you actually owe. If you are not confident of the calculations, take the return and any notices you have received to a tax professional for review.
Once the amount that you owe the IRS has been established, you have several choices for dealing with your tax problems.