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

With tax debt, better to pay late than file late

For many people in Ohio, this year's tax season has been a season of surprises. Whether you're an upper-income filer who has a seen a higher tax rate or you're a filer who unknowingly claimed too many withholdings, owing money to the Internal Revenue Service can be stressful.

Of all of your creditors, the IRS generally has the most resources to collect and hand out penalties. There are some steps you can take, however, to begin handling your situation in the event that you don't have the money to pay your tax bill.

If you realize that you won't be able to pay by the deadline, the first thing to understand is that, in the eyes of the IRS, not filing is much worse than not paying on time. You are likely to see significantly stiffer penalties if you don't file than if you file for an extension. The penalties for not paying by the deadline can also be dropped more easily than the penalties for failing to file on time.

In other words, it is a good idea to let the IRS know your situation and begin working out an installment plan. Generally, an installment plan can last a maximum of 72 months, and you'll have to pay a fee to establish the agreement.

You can apply online for an installment plan if your tax debt doesn't exceed $50,000. However, if your debt is more than $50,000, then you'll have to fill out Form 433-A.

In any case, if you aren't sure about your tax situation and believe you could be facing penalties or even criminal charges, then you may want to speak with an attorney who can help you choose the best course of action.

Source: FOX Business, "Can't Pay Your Taxes? 10 Steps to Take Now," Kathryn Buschman Vasel, Feb. 26, 2014

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