Failure to pay taxes before the filing
deadline will result in tax debt. Beginning the day after the April 15th
filing deadline, the IRS begins to charge penalty and interest on the unpaid
taxes. Even if you have paid some amount of taxes and filed your tax return
before the filing deadline, you will still be charged penalty and interest on
the taxes that remain to be paid.
Typically, the IRS charges a 0.5 % penalty
on the tax debt amount, and can charge up to a maximum of 25% penalty on the
tax debt amount for a month month. A penalty is charged on tax debt each month.
Paying the entire tax debt in a single
payment is the simplest method to resolve tax debt, but you can also pay your
back taxes in installments or negotiate with the IRS to get a reduction in tax
debt. To pay in installments or get a reduction in tax debt, you need to qualify
for a tax debt payment plan such as Installment Agreement or Offer in
If you have no ability to pay tax debt, you
can try to achieve the status of Currently Not Collectible for your tax debt
case. This will allow you to pay your tax debt only when your financial
condition is more secure and allows either partial or full payment of tax debt.
Non-filing and paying of taxes must be
avoided even if you have limited or no ability to pay your debt. In case of
limited ability to pay your taxes, pay as much as you can before the filing
deadline, and you may qualify for an Installment Agreement to pay the remaining
balance. It will help you to substantially reduce IRS penalties and interest.
Labels: Back Taxes, Financial Hardship, Installment Agreement, IRS, Tax Filing, Taxpayers