11 Tips for Taxpayers Who Owe Money to the IRS
According to the Internal Revenue Service, most taxpayers get a refund from the IRS when filing their tax returns. For those who don’t get a refund, the IRS offers several options to pay their tax bill. For those taxpayers who can’t full pay their tax balance, the IRS has options for them, too. Here are 11 tips for taxpayers to get you started on your journey towards a resolution:
1. Tax Bill Payments If you get a bill from the IRS that shows you owe back taxes, you are expected to promptly pay the tax owed including any penalties and interest. If you are unable to pay the amount due, it may be better for you to get a loan or borrow the money to pay the bill in full rather than to make installment payments to the IRS. That’s because the interest rate and penalties the IRS must charge by law are often higher than what lending institutions may be offering.
2. Payment Options The IRS offers several ways for you to pay your bill, including online, by phone, and by mail. Learn how to pay some or all of your IRS tax bill here.
(CA Residents: How to Make Payments to the California Franchise Tax Board (FTB))
3. Additional Time to Pay Based on your circumstances, you may be granted a short additional time to pay your tax. A brief additional amount of time to pay can be requested by calling the IRS the phone number on your most recent IRS notice or letter. There generally is no set up fee for a short-term agreement. Don’t feel comfortable speaking with the IRS? We can request an extension for you. Simply contact us here and we’ll explain how during your free consultation.
4. Reduce Penalties and Interest Taxpayers facing large tax liabilities often see their debts increase significantly due to added penalties and interest. The IRS often applies various penalties and interest to unpaid back taxes making it more difficult for taxpayers to pay their federal tax debt. These penalties are mandated by the U.S. Tax Code and are most commonly assessed against taxpayers for nonpayment or underpayment of taxes, failure to timely file a tax return, and failure to make payroll tax deposits (for businesses). In addition to interest that accrues on any unpaid tax, interest is also charged on the penalties themselves. It is always best to ask the IRS to remove all penalties and interest to help reduce your overall balance. See some of our recent penalty removals here.
5. Installment Agreement You may request an installment agreement if you cannot pay the total tax you owe in full. This is an agreement between you and the IRS to pay the amount due in monthly installment payments. You must first file all required returns and be current with estimated tax payments or withholding. If an installment agreement is approved, a one-time user fee will be charged by the IRS. The user fee for a new agreement is $105 or $52 for agreements where payments are deducted directly from your bank account. For eligible individuals with lower incomes, the fee can be reduced to $43. See some of our recent installment agreements here.
6. Offer in Compromise The IRS is now offering more flexible terms with its Offer-in-Compromise (OIC) Program. An OIC is an agreement between a taxpayer and the IRS that settles a taxpayer’s tax debt for less than the full amount owed. An OIC is generally accepted only if the IRS believes, after evaluating the taxpayer’s financial situation, that the tax debt cannot be fully paid via a lump sum or through a monthly payment agreement. A proper evaluation and presentation of your financial picture to the IRS is critical in getting an Offer (aka tax settlement) accepted. See some of our recent settlements here.
7. Fresh Start The IRS has a program to help struggling taxpayers get a fresh start. Through the Fresh Start program, individuals and small businesses may be able to pay the taxes they owe without facing additional or unnecessary burdens, such as a tax lien, bank levies, and wage garnishments. See some of our recent fresh start agreements here.
8. Tax Liens The IRS will typically want to file a tax lien on past due tax liabilities. A tax lien is the government’s way to secure its interest in your assets and facilitate collection of your tax liability. After a lien is properly filed, the government has a right to all of your property, as well as any property or rights to property you acquire thereafter. Once its interest in your property is secured, the government can levy or seize your property as a means of collection. In addition to the prospect of a levy or seizure, taxpayers will often witness a significant decline in their credit score and an increase in difficulty in obtaining a loan or line of credit. Taxpayers have various options when it comes to stopping a proposed lien filing or having an already-filed lien released. We regularly prevent and release liens for our clients.
9. Check Withholding When your federal tax return is completed, you may discover that you owe money to the IRS. If the amount due is substantial, it’s probably time for you to review your withholding election. If you owe a large amount of tax, you may need to increase the amount of taxes being withheld from each paycheck you receive. Taxpayers who have a balance due year after year may want to consider changing their Form W-4, Employee’s Withholding Allowance Certificate, with their employer. This will help to prevent another tax liability in the future.
10. Check Estimated Taxes If you do not have taxes withheld from your income, you may need to make estimated tax payments. This may apply if you have income such as self-employment, interest, dividends or capital gains. It could also apply if you do not have enough taxes withheld from your wages. If you are required to pay estimated taxes during the year, you should make these payments to avoid a penalty. If you are self-employed, be sure to make all of your estimated tax payments to avoid owing the IRS on tax day.
11. Current Compliance Taxpayers who owe the IRS should be aware that negotiating with the agency cannot commence until they are deemed in “current compliance” with their federal tax obligations. This means you must first file all required returns (even if you owe) and be current with estimated tax payments or withholding. Before the IRS can consider a tax settlement or a payment plan, the agency will demand that these prerequisites are met. Meeting this requirement will establish “goodwill” with the IRS and help to facilitate a favorable outcome of your tax dispute.
See: How Tax Relief Works
Not only are we licensed Tax Relief Specialists, we are also former Senior IRS Agents that now serve the best interests of taxpayers like you – all we do is handle IRS Tax Relief matters, all day, every day. Speak to us for FREE at (949) 260-4770.
Very good experience and glad I made the decision to use this company. Michael was professional and courteous in all of my dealings with him. My tax dilemma was quickly resolved and Michael even waived much of his normal fee. Where else have you heard of a business doing that? Without question, I would recommend Landmark Tax Group for anyone seeking a fair resolution for a tax problem.
Michael was fantastic! He understood my case very quickly, got right to work and was super prompt with communications. His professionalism and his friendly demeanor immediately put me at ease. I whole heartedly recommend contacting them if you’re in need of advice and assistance.
I received great advice in how to deal with the FTB, i don’t review often, but when someone is honest and legitimate, they do deserve a review. My questions were answered, and if i didn’t quite understand, Micheal was more than willing to give me follow-up answers to better help me. I highly recommend Landmark Tax Group, just for the mere fact that they treat you as a human being, Not a cash cow.
I had some returns from previous years to complete after receiving a hefty bill from the California Franchise Tax Board. Michael was prompt in answering my questions and very helpful and reassuring. We had several back and forth communications and this was all done for free since they do not prepare tax returns. He gave me some contacts and advice and now I’m on my way to getting my situation resolved. I’m very thankful for his advice and guidance.
While Michael’s scope of practice meant that we ultimately could not work directly to resolve the issue I was having, he was very prompt, professional, generous and kind in taking time out of his schedule to consult with me, refer me to his network of colleagues- not just once, but a second time even months after. Some professionals are just after services and compensations but Michael strikes me as someone who genuinely cares about your situation and wants to see to it that it gets resolved. These other reviews speak to that as well. You never want to be in a situation where you need to be looking up tax help, but God forbid you ever are, Michael is the person you want in your corner!
Michael and Landmark Tax Group were simply awesome. I like so many others had a year’s old tax issue arise with California FTB. I no longer live there which compounded the stress of the situation. The state had seized monies and filed a lien. After a call to an online tax relief place and some sketchy phone calls I was so happy to find Michael and immediately felt in good hands… at a time of considerable panic.
Fast forward to today and with his help I am totally debt free. He saved me $23,000
I highly recommend Michael and Landmark Tax Group
Michael Raanan is an angel! Michael went above and beyond for me. He was very knowledgeable, professional and very thorough! He is easy to talk to and amazing at what he does. I have a feeling that everyone at landmark tax group shares this way of professionalism! I highly recommend coming here for any and all of your tax help. They will help you and you will be more than pleased with them. 🙂
After calling the other highly advertised tax assistant agency’s and being disappointed with how they responded to my tax matter, I feel fortunate to have found out about the Landmark Tax Group. Michael was very understanding of my situation, and I felt very comfortable dealing with him. He was very knowledgeable and professional in handling our tax issue in a timely manner. I would highly recommend The Landmark Tax Group to anyone who needs assistance in dealing with the IRS.
Wow, just wow. I called Michael today to ask about some major tax issues I had with a defunct corporation I’d started years ago. Michael talked to me for about half an hour, walking me through options and generally helping me understand my options.
Because of him, I’m going to rest nicely tonight for the first time in weeks. It was great to hear that he used to work in IRS collections for 8 years too… which made me feel a lot more secure in his answer.
In all, I’m completely stunned by the level of service he gave to a random stranger who called in and wasn’t going to turn into any revenue for him. I have to imagine that his level of service for actual customers is unreal.
Fast, dependable, reliable, full transparency. Michael Raanan of Landmark Tax Group allayed my fears spending the rest of my senior years paying my tax debt. As a result of his extensive knowledge of the tax code, the right questions to ask, and his dedication to my case, I had information, resolution and a plan of action within 24 hours, start to finish. Amazing! I highly recommend Landmark Tax Group!
We were very pleased with the expert assistance we received from Michael Raanan at Landmark Tax Group. In a matter of months we had a resolution to our IRS tax issue. He was very knowledgeable, professional, explained things in easy to understand terminology & was very easy to discuss our tax issues with. We called around to other tax groups & just felt the most comfortable speaking & working with Michael. We are happy to recommend him & his firm.
Michael Raanan represents the highest level of professionalism, integrity, decency, and true concern for his clients. His advice every step of the way was right on target. The end result was a savings of $13,000 on my taxes.
I have already referred him to the other members of my financial team and have complete confidence in referring any clients to him. He is a shining star in his field.
Oh, did I mention how reasonable his fees are? Exceptional considering the amount of attention he provides.