5 Reasons – You Should Resolve Your IRS Debt Today
Penalties continue to accrue. Unpaid tax debts are subject to late payment penalties. The penalty is typically half of one percent of the amount of the unpaid tax.
This may not sound significant given the low rate, but it adds up. The penalty is computed each month or part of a month after the date the tax is due. This is means that the penalties start accruing each month from the day your tax return was to be filed. It should also be noted that the penalty jumps to five percent a month if the tax return was not filed.
Interest continues to accrue. The interest rate for unpaid tax debts fluctuates. The government sets the interest rate each quarter. It is the federal short-term rate plus three percent.
Like the late payment penalty, interest on unpaid tax debts begins to accrue from the day the tax return was to be filed. It is compounded daily. It is computed based on the tax and penalties.
Future financial benefits or windfalls may be in jeopardy. It may be hard to believe, but there are times in life when we receive financial windfalls. It happens. It may be in the form of a larger than expected tax refund, a gift or inheritance from a loved one, or a bonus or pay raise at work.
Taxpayers with unpaid tax debts may be unpleasantly surprised to find that the IRS takes their financial benefit or windfall. Alternatively, the IRS may start its collections actions after the funds are received. This can make it more difficult to manage the IRS collections effectively.
It may not be possible to correct errors in the amount of the tax liability after time has passed. The IRS often assesses the wrong amount of tax. In some cases this is due to IRS processing errors. In other cases it is because the IRS filed tax returns on behalf of the taxpayer, which do not factor in all of the available deductions and credits. This gets to be difficult as time passes by as records and access to information to support the deductions and credits is simply lost to time. Also, there may be a limited amount of time to correct these errors before the taxpayer has to resort to paying the tax first to be able to file a refund claim with the hope of recouping the funds paid to the IRS.
It is no fun living with the threat of IRS collections. It is not fun owing debts that cannot be paid. It is even less fun owing the IRS an unpaid tax debt. The IRS has broad collections powers and it can exercise these powers at any time. You should not have to fear answering your door, getting your mail, or picking up the phone for fear of the IRS. There are avenues for managing IRS collections that can give you peace of mind.
We often see cases where the amount of the tax liability that the IRS is trying to collect is wrong. These tax liabilities are more difficult to correct as time goes by. We also see cases where the penalties and interest are several thousand dollars. We also see cases where taxpayers wait until they receive a financial benefit or windfall before they decide to do something about their tax debt or the IRS takes the funds--both of which make it difficult to resolve the unpaid tax debt effectively. In most cases these taxpayers could have reached a better resolution had they addressed their unpaid tax debts sooner rather than later.
We can help. We help taxpayers with IRS collections issues daily. If you have an unpaid tax debt, we would like to hear from you. Please contact us today to schedule an appointment to see how we can help.
Empowered Tax Relief,www.wefixirs.com, #wefixirs, @wefixirs