If you find yourself unable to pay your federal income taxes then you have a problem...the bigger the debt the bigger the problem. For those owing $100,000 or more it's pretty much a no brainer that they need some help. After all that's a lot of money and there is probably a lot at stake with their situation, piece of mind and all. For those owing under $100,000 it becomes a little more questionable for them as to whether they need representation or not. They think they ought to be able to do for themselves. After all the IRS has much bigger fish to fry and with all the tax evaders out there they probably don't have the manpower to waste on those relatively small dollars. And the IRS, being the benevolent organization that they are, will understand their situation and be reasonable and fair about the whole thing.
Here is what taxpayers need to understand about the IRS...their use of the word fair can be found at their website in the mission statement as follows: The IRS Mission Provide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all. This mission statement describes our role and the public's expectation about how we should perform that role. * In the United States, the Congress passes tax laws and requires taxpayers to comply. * The taxpayer's role is to understand and meet his or her tax obligations. * The IRS role is to help the large majority of compliant taxpayers with the tax law, while ensuring that the minority who are unwilling to comply pay their fair share.
There is also a payment option available that gives the taxpayer a short amount of additional time, up to one hundred and twenty days, to pay their obligation in full. This option does not have any associated fees with it but interest will continue to accrue until the tax owed is paid in full.
The taxpayer may request an installment agreement when filing their return. They may do so by requesting a pre-assessment installment agreement on current tax liabilities using the Online Payment Agreement (OPA) application at the IRS website. They may also request an agreement when filing their return by attaching either form 9465 Installment Agreement Request or by simply attaching a written request for a payment plan to the front of the return.
If the taxpayer did not request an installment agreement when they filed their return and they receive a bill from the IRS, they may still request one using the Online Payment Agreement (OPA) application at the IRS website. They also may request one by submitting either form 9465 Installment Agreement Request or by attaching a written request for a payment plan to the front of the bill and returning to the IRS.
There is still yet another option to request a payment plan and that is to call the toll-free number on the bill. The IRS will respond to a request usually within 30 days as to whether it has been approved or denied. The taxpayer must specify how much they can pay each month and on which day they wish to make that payment. The IRS will expect to receive the payment on the day specified so the taxpayer must make sure they account for mailing time. It is also advisable that the taxpayer choose an amount that is realistic and will not cause them to miss or make late payments. There are a number of options available for payment and they include: * Direct debit from a bank account * Payment via check or money order * Payment by credit card via phone or internet * Payment by Electronic Federal Tax Payment System (EFTPS) * Payment by Online Payment Agreement (OPA) * Payroll deduction from your employer
When submitting an offer in compromise the taxpayer is required to submit a $150 application fee plus a 20% down payment if choosing the lump sum cash offer or the first installment if choosing a periodic payment plan offer. A taxpayer can request an exception to these requirements because of their income level but must submit the proper form along with the offer. The amount of time the taxpayer has to pay off the debt depends on the offer plan that is chosen. If the taxpayer is already on an installment agreement they may stop making payments on that if they choose the periodic payment plan offer so they can make payments on that.
Once an offer has been accepted the taxpayer is required to honor the terms of the agreement until the amount is paid in full and is also required to remain in compliance in the filing and payment of all required taxes for a period of five years or until the amount is paid in full, whichever is longer.
Here is what taxpayers need to understand about the IRS...their use of the word fair can be found at their website in the mission statement as follows: The IRS Mission Provide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all. This mission statement describes our role and the public's expectation about how we should perform that role. * In the United States, the Congress passes tax laws and requires taxpayers to comply. * The taxpayer's role is to understand and meet his or her tax obligations. * The IRS role is to help the large majority of compliant taxpayers with the tax law, while ensuring that the minority who are unwilling to comply pay their fair share.
There is also a payment option available that gives the taxpayer a short amount of additional time, up to one hundred and twenty days, to pay their obligation in full. This option does not have any associated fees with it but interest will continue to accrue until the tax owed is paid in full.
The taxpayer may request an installment agreement when filing their return. They may do so by requesting a pre-assessment installment agreement on current tax liabilities using the Online Payment Agreement (OPA) application at the IRS website. They may also request an agreement when filing their return by attaching either form 9465 Installment Agreement Request or by simply attaching a written request for a payment plan to the front of the return.
If the taxpayer did not request an installment agreement when they filed their return and they receive a bill from the IRS, they may still request one using the Online Payment Agreement (OPA) application at the IRS website. They also may request one by submitting either form 9465 Installment Agreement Request or by attaching a written request for a payment plan to the front of the bill and returning to the IRS.
There is still yet another option to request a payment plan and that is to call the toll-free number on the bill. The IRS will respond to a request usually within 30 days as to whether it has been approved or denied. The taxpayer must specify how much they can pay each month and on which day they wish to make that payment. The IRS will expect to receive the payment on the day specified so the taxpayer must make sure they account for mailing time. It is also advisable that the taxpayer choose an amount that is realistic and will not cause them to miss or make late payments. There are a number of options available for payment and they include: * Direct debit from a bank account * Payment via check or money order * Payment by credit card via phone or internet * Payment by Electronic Federal Tax Payment System (EFTPS) * Payment by Online Payment Agreement (OPA) * Payroll deduction from your employer
When submitting an offer in compromise the taxpayer is required to submit a $150 application fee plus a 20% down payment if choosing the lump sum cash offer or the first installment if choosing a periodic payment plan offer. A taxpayer can request an exception to these requirements because of their income level but must submit the proper form along with the offer. The amount of time the taxpayer has to pay off the debt depends on the offer plan that is chosen. If the taxpayer is already on an installment agreement they may stop making payments on that if they choose the periodic payment plan offer so they can make payments on that.
Once an offer has been accepted the taxpayer is required to honor the terms of the agreement until the amount is paid in full and is also required to remain in compliance in the filing and payment of all required taxes for a period of five years or until the amount is paid in full, whichever is longer.
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Harris Smith is a personal finance writer interested in home equity line of credit Don't Miss Out! Find out the 4 ways you can achieve Debt Consolidation.