What are delinquent taxes?
To put it simply, delinquent taxes refer to any amount of tax debt owed to the IRS. When there’s a delinquent account, it means the due date for the tax return or whatever established liability has passed and yet the amount owed remains unpaid. In the case that you have delinquent taxes, it’s important that you act as quickly and swiftly as possible in handling the situation, as there are major repercussions to not paying your taxes.
What happens if a taxpayer does not pay delinquent taxes?
First and foremost, penalties and interest will accrue on top of the outstanding amount. Once the IRS decides that your taxes are ‘delinquent,’ they’ll start tacking on penalties that will worsen the longer the outstanding amount remains unpaid. The order of the process then progresses if you do not pay the amount or respond to letters or notices that your account has changed to delinquent. A Revenue Agent is then assigned to your specific account and they’ll reach out to you in order to resolve the issue.
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What happens if there’s no response or payments during the collection period?
There’s a possibility that if the delinquent taxpayer is being noncompliant, the IRS will issue an assessment and then go on to issue a tax warrant. This tax warrant covers the initial outstanding amount and then the interest and penalties that have accrued throughout the process. If the tax warrant is not paid within a certain amount of time, for whatever reason, then the case is filed through the county Superior Court. Then there’s a possibility that liens come. A tax warrant basically establishes a lien against personal property, or any asset that could be used to pay off the debt owed. This includes property of any sort, automobiles, wages, and even bank accounts. Once the case is filed, it then becomes legal for the IRS to take your property or put a hold on your bank account – they can even go as far as to take the money from the bank themselves after a respective amount of time has passed.
What are some ways to ensure avoiding being a delinquent?
For one, know your tax deadlines. As a taxpayer it is your duty to not only pay taxes but to also know the responsibilities that you have. If you haven’t filed before, filing electronically is greatly recommended as not only is it easier, but the systems used can often flag mistakes that would have otherwise been sent through. As with most things, it’s important to see a professional tax consultant. They know best and will not only help you file properly, but ensure that you receive that correct back taxes and that you’re not at risk for delinquency.
A few general rules of thumb:
- Open all mailed documents from the IRS. If you’re receiving something via mail from the IRS, chances are it is highly important. Even if it’s just information detailing due dates and the correct way to file, it’s important to be as knowledgeable as possible about the tax filing process.
- Keep track of everything. Whenever you file your taxes, always make records of what you’re filing. If you’re going to send it in via mail, pay for certified mailing so that you can prove it was sent on a certain date.
- Notify the IRS of any address or contact changes. You don’t want important IRS information being sent to an address that you’re no longer at. Even something minor sent to an incorrect address can become a nightmare to deal with as it goes on to accrue penalties and interest simply because your address has not been updated in the system.
Are there ways to make payments on the amount owed?
There are many different programs and methods of dealing with outstanding tax debt. To put it simply, there is a possibility that you will be able to make payments on the amount owed over an extended period of time. There is no guarantee of this, as cases are judged and assessed individually.
However, if a taxpayer does indeed decide to move forward with this method, they will have to complete a financial statement. Depending on this statement, the IRS will then decide whether or not the taxpayer is eligible for a payment plan and what type of plan they’re going to be issued. When making payments to the IRS, all payments must be electronic.
What if I want to appeal?
Again, it is highly recommended that if you’re looking to appeal your amount owed, you first see a professional to determine whether or not you are in the ‘right.’ A few instances in which you have the right to appeal are as follows:
-You believe that there has been a mistake and the amount you owe is wrong in relation to your taxes filed. Just as well, an appeal can be made stating the taxpayer does not owe any money at all.
-If a taxpayer’s refund request is not granted
-If you’ve received an adverse letter ruling from the Taxpayer information and Education section of the department
Is there a way to pay if the taxpayer simply does not have the money?
The short answer is yes. As stated before, seeing a tax professional is incredibly important in identifying the different options a taxpayer has when trying to settle his debt. No tax settlement will be entertained by the IRS unless all the past returns have been filed. This means if a taxpayer has outstanding tax returns that they have yet to file, they must first file these before beginning correspondence with the IRS.
Generally, the IRS is not going to destroy your financial situation because you do not have the money to pay your taxes. With a professional and the right course of action, the IRS will work out an agreement with the delinquent taxpayer that works for all parties involved.
When dealing with the inability to pay outstanding taxes, the IRS has multiple different installments that can give relief to a taxpayer. It’s important to note that it’s recommended the taxpayer pay off as much as they can of their debt before moving forward with a payment plan. The payment options go as follows; an installment agreement, an offer in compromise, or a temporary delay of collection.
Installment Agreement: Essentially, this is a monthly payment plan that allows a taxpayer to pay off the entire debt owed in certain increments over a longer period of time. In this way, the taxpayer pays off the debt much like they would a loan. The time can range of payment can range anywhere from 3-6 years, dependent on the amount. If the amount owed is $50,000 or less, there are ways apply for the installment agreement online.
Offer in Compromise: This type of payment plan is basically a single settlement. After consulting with the a tax professional, the taxpayer then pays off an entire lump sum that equals less than the amount owed. This amount is decided by the IRS after assessing the taxpayer’s account thoroughly. However, the taxpayer has to meet a specific criterion for this type of payment plan and it’s usually fairly difficult to meet eligibility. Take a taxpayer that is eligible for an installment agreement into consideration, if they are indeed so, they will not be further eligible for an offer in compromise. That’s why it’s important to consult professional help to determine eligibility. If the taxpayer is eligible, the offer in compromise can be incredibly beneficial because it forgives part of the outstanding amount.
Temporary Delay of Action: This isn’t so much a payment plan, but more a hold on the payments entirely. What will happen is the IRS will tag the taxpayer’s account as ‘not collectible’ and will wait for the taxpayer’s financial situation to improve. It’s important to note that this type of ‘payment plan’ will not forgive any of the outstanding amount and will sometimes tack on penalties and interest while the taxpayer comes up with the money. In some cases, the delay of the process goes without penalty and allows the taxpayer more time to resolve the issue.
As a general note, the IRS wants to help those facing economic hardship. That’s why it’s important to not only do your own research, but to make sure that all your cards are in order and that you know exactly what options you’re eligible for.
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What should you do?
Taxpayers searching for delinquent taxes help should consider working with Community Tax. If you are in debt to the IRS or a state tax authority, there is only so much time before collection actions begin. The IRS will begin by placing a lien on your accounts, which will damage credit ratings and make it harder to borrow money, get a mortgage or rental agreement, and other loans or credit cards. Should an individual still fail to pay their income taxes when facing a lien, the IRS will continue to levy actions to the point of seizing income and assets.
In many cases, taxpayers that try to handle the situation on their own will often overlook important parts of the filing process and their own eligibility for certain programs offered. The problem taxpayers face is that once the IRS becomes involved with their overdue tax debt, they allow too much time to pass before seeking help or taking the necessary steps to solve the problem. In this ‘downtime’ a taxpayer could see huge penalties accrued on their account and end up owing a lot more than they otherwise would have.
It is incredibly important to seek help immediately, formulate a plan in dealing with the tax debt, and then move forward accordingly. Even if a taxpayer does not know what to do, silence only worsens their case with the IRS. It’s advised that at the very least a taxpayer should reach out to the IRS and communicate their difficulties in paying their debt and explain that they’re currently in the process of searching for a solution. This way the IRS or Revenue Agent can note that the taxpayer is aware of the problem and taking the right steps in handling it.
How Should I Get Delinquent Tax Help?
Getting delinquent tax help can be a difficult process. There are many companies and individuals that claim to have the best resolution practice. In truth, a lot of these resolution sources will not be very helpful, and may even charge a great deal for their services. At Community Tax, our resolution team puts customer satisfaction at the top of our priority list when resolving delinquent tax issues. Our tax resolution process is separated into two parts. During the investigation phase, our team undergoes a very detailed investigation of our client’s financial situation, getting the master file from the IRS and using a questionnaire to ensure that any details of the client’s life are discovered. After the investigation phase, our case analysts will go through the results of the investigation and let you know exactly what services Community Tax offers for your specific case so that any fees associated with our services are known before we begin working. After you decide to move forward into phase two, our tax resolution team will start work to negotiate with the IRS and resolve your delinquent tax issues.
What is Community Tax?
Community Tax is not just a tax resolution company that can provide delinquent tax assistance. Our company also provides tax preparation and bookkeeping services to help our current and new customers prevent future tax problems. If you are in need of help and are looking for a trusted and professional company to help you immediately with delinquent tax issues, call us today and learn more about how our tax resolution team can help you. Call 1-888-676-4319.