Owe The IRS? Do This not That
Hi ho, it’s off to work I go. I owe, I owe, so it’s off to work I go. Ever head that little quip before? Sadly, some may find themselves owing our friends at the Internal Revenue Service. In that case, owing is even a bit more stressful is it not? But it does not have to be that way. As it turns out, there are strategies you can use right now, today to work out a solution with the IRS.
Tax Resolution Companies?
First, let’s go ahead and address the first and most obvious solution that might pop up should you Google it. Should you fork out even more of your hard earned money and hire an outside firm to deal directly with the IRS? Maybe, maybe not. Let’s take a look.
Do It Yourself?
Although just the sound of dealing with the IRS might send shivers up your spine, it does not have to be quite so stressful after all. It turns out, if you owe less than $10,000 there is already an existing plan specially made for you direct from the IRS.
It works like this. Suppose you receive one of those official looking letters from the IRS. Dear Taxpayer, it begins as you silently curse (or maybe loudly, depending on who’s home). You read on and find out that you didn’t dot the “i” on page 22 of your return, you owe another $8,782. You read on to learn there is a $195 penalty assessed plus interest on the amount you didn’t pay. No wonder some want to scream when these letters show up.
But try to stay calm, you are about to learn a way out. No, not a way out of the debt, but a way to take care of the payment. Unless you happen to have another $9,000 laying around looking for somewhere to go, you may find yourself scrambling to figure out how to pay this new bill.
Relax, the IRS has people like you in mind. The name of the program that you can use in this case is called Guaranteed Installment. All you have to do is call. You call the number at the top of the form the IRS mailed you or you can call 1-800-829-1040. Be prepared to give them the notice number. That’s usually up there in the top left side of the form. Now here’s another practical tip.
As you might expect, you will hear a message that goes something like: “This call may be recorded for training purposes.” Yeah, okay, whatever. The point is you need to make sure you take notes during the call. Who did you talk to, what did they say to do, etc. You want to keep these notes with your tax files should you need to call back.
Now, once you have a helpful agent from the IRS on the line, carefully explain what you want. Tell them you are requesting to set up a Guaranteed Installment Agreement (GIA). Qualifying for the GIA is fairly straightforward. As long as you have the resources to pay the entire tax bill within 36 months, they will set you up. In fact, a GIA can be setup with payments as low as $25 a month.
What about Penalties?
Is there something you can do about the associated penalty with your IRS notice? Maybe. If this is your first time, that is, your first penalty with IRS, you may be able to get it waived. Simply request what is called a “First Time Penalty Abatement.”
Professional Help Needed?
All that being said, are there times when you should call a professional? Absolutely! For example if your tax situation is complicated, say you own a business or two, multiple rental properties and investments, you may best be served by calling in the pros.
Pay A Pro? Who you Gonna Call?
Calling a pro means calling a person or an agency that can get the job done and that you can trust. Beware of the so-called tax resolution ads you see plastered all over the internet. On the other hand, a reputable CPA firm or perhaps even an enrolled agent can deal directly with the IRS on your behalf.
As you can see, although owing the IRS may be an uncomfortable position to be in, there are ways to take care of your situation.
What about You?
Now what’s your take? Ever had to call the IRS about a penalty or tax owed?