Tax Debt Penalties

Know the Fees and Penalties Attached to Tax Debt 

Posted by on Feb 1, 2016 in Tax Debt Penalties | Comments Off on Know the Fees and Penalties Attached to Tax Debt 

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Don’t assume that the matter of the back taxes you failed to pay isn’t a big deal that you don’t have to worry about. When the IRS catches up with you and insists you pay those taxes, you’ll quickly learn it’s a very big deal indeed.

The problem that most people run into is that they assume the amount they pay isn’t very big, so if the IRS does insist on repayment, they’ll have no trouble resolving the bill. What they don’t anticipate is how large the bill has become. Few people fully grasp how much the interest and penalty fees the IRS attaches to the bill add up.

Late Filing Penalty

No matter what amount of taxes you owe, if you don’t get your tax return filed on time, you’ll be charge a Late Return Filing Penalty. You’ll also be charged a penalty if you only pay part of what you owe by April 15th, or if you fail to make one of the agreed upon payment deadlines. If it’s determined that you owe the IRS money, the automatic penalty will be 5% of what the IRS believe you owe.

Late Payment Penalty

If you owe the IRS money and didn’t have the funds to pay the bill in full on April 15th, you are free to set up a payment plan. Make sure you honor the payment plan you created and that each payment is made before the deadline. Having a payment arrive even a day late means the IRS will attach a 0.5% penalty to your total. The more frequently you make your payments late, the more the penalties will add up.


Interest

The biggest headache Americans who owe back taxes run into is the amount of interest the IRS attaches to the balance. While the late penalties are attached each month, the amount of interest the IRS piles onto your account is done daily, causing what started out as a reasonable amount to skyrocket into a financial nightmare.

Get Relief

If you owe back taxes and are afraid that you’ll never be able to pay the amount down, you will be pleased to learn that there are IRS tax settlement programs that you can use to help reduce the amount you owe. In many cases, as long as you prove financial need and are diligent about making your payments on time each month.

What are your Best Chances of Getting Relief from Tax Debt

If you owe back taxes, you’re not alone. Approximately, 8.2 million Americans owe the IRS back taxes, which adds up to about $83 billion or $10,000 per person. The best time to arrange to pay your back tax debt is before a debt collector contacts you. Being the first to contact the IRS shows that you’re serious about resolving the matter.

Increase the Chances of Getting a Tax Settlement

Whether you’ve decided to address the issue of your back taxes on your own, or you’ve received some prodding from an IRS debt collector, you shouldn’t make a move without the assistance of a good tax settlement attorney who knows exactly how to negotiate with the IRS to get you the best possible settlement.

The sooner you enlist the aid of a tax settlement attorney, the sooner you can put your tax debt nightmare behind you.

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