Well, the tax deadline is here, and even though it’s going to be nice to have another Tax Season in the books, some people will find that they don’t have enough cash to pay Uncle Sam. That could lead to problems, including interest charges, penalty fees, bank account seizures and liens on property. The good news is in many, many instances, owing the IRS never reaches that extreme.
So let’s talk about what the IRS does offer, for both short-term and long-term payment plans. Keep in mind that you could still get hit with penalties and interest, raising your overall bill.
First, if you’re a bit short on money, the IRS can grant a 180-day extension to pay down your debt. There will be an approved deadline, up to 180 days out, and you’ll have to pay in full by then. To qualify for this, you must owe less than $100,000 (including fees and penalties). Can’t pay in that time frame? If you owe less than $50,000, the IRS offers long-term payment plans. These plans come with filing fees (totaling less than $200), so keep that in mind.
Now, let’s talk about how you might be able to lower the bill. While it IS possible to do that, (Called an Offer-In-Compromise), it’s incredibly rare. Don’t be fooled by the radio commercials or your previous experience with your credit card company; frankly, there’s an entire scam built on the Offer-In-Compromise! In those rare cases where it can be applied, you’ll need to owe more than $10,000 and be up to date on your current estimated tax payments. This isn’t a get-out-of-debt-free card, and the IRS will closely evaluate not just your income, but also assets, such as property. Generally speaking, the IRS wants to get as much as possible, and that might mean putting a lien on your properties.
You can’t be locked up for lacking the funds to pay your taxes, but attempting to hide income or assets could lead to jail. Simply not filing your taxes is considered a misdemeanor, so make sure you always file even if you can’t pay. Not filing is a terrible idea!