Robert J. Fedor, Esq., L.L.C.

Advice for individuals who are unable to pay their taxes

The recent economic depression set off a chain reaction of events the subsequently resulted in many individuals and small business owners having financial difficulties. Individual's savings and retirement accounts were wiped clean and many small business owners were either forced to close or find other ways to make ends meet.

While the economy is rebounding, many are still attempting to get back on their feet which can make tax season and the discovery that one actually owes money to the IRS that much more upsetting. So what's an individual or small business owner to do if he or she owes more than they can afford to pay in taxes?

The first step is not to ignore the problem and fail to file a tax return. The penalties associated with filing late or not failing a tax return are much greater than those associated with late payment. It's important therefore, to file on time regardless of one's ability to actually pay.

For individuals who owe an amount they believe they'll be able to repay, a 9465 IRS form may be an option. A 9465 form can be used by tax payers to establish a monthly payment plan. Individuals are notified within 30 days of submitting a 9465 form about whether or not their request has been granted. In addition to the monthly payment amounts, a taxpayer will be responsible to pay late fees and penalties.

For those taxpayers who owe more money than they expect to ever be able to pay, an "Offer in Compromise" can be used to strike a deal with the IRS. Acceptance into this program means the IRS will closely look at an individual’s finances to determine what amount he or she can pay.

While some individuals who are unable to pay taxes may be tempted to simply ignore the problem and not file a tax return, however, eventually the IRS will notice. Tax debt associated with back taxes may result in an individual not only being forced to repay the amount initially owed, but also additional fines and penalties.

Small business owners or individuals who failed to file a tax return or who are delinquent in paying taxes may also face criminal charges. Those who find themselves in this situation would be wise to turn to a criminal attorney who handles tax matters and can provide advice and assistance through the legal process.

Source: Business to Businesss Community, "What If You Can’t Pay Your Taxes?," Rick Gosset, March 21, 2014 

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