The culmination of the tax season festival has come and gone. Ideally, you got your tax return filed by the deadline. But maybe you didn’t. Either way – what happens now? First, the simpler scenarios – your taxes were done and filed by the deadline (April 18th):

  • Everything is done and filed and you are due a refund. Lucky you! Your work here is done. Your return will be processed (eventually) and you will be sent your refund per normal IRS procedures (eventually). If you e-filed and got direct deposit, that’ll help move the process along.
  • Everything is done and filed, but you owe taxes. Bummer. However, you were able to pay your tax bill when you filed. So, your job is finished. Your return and payment will be processed (eventually) per normal IRS procedures. As a bonus, you may have avoided two penalties from the IRS – Failure to File (by getting your return in on time) and Failure to Pay (by paying what you owe on time) — as well as interest.

That’s if it all goes smoothly. But what happens if you can’t pay or you missed the deadline completely? Let’s talk those scenarios:

  • You filed on time but were unable to pay what you owed. Good news/Bad news time. Good news is by getting your return in by the deadline, you avoided the Failure to File penalty (5% of the total tax debt added to the balance due each month (up to 25%)). Bad news is you are going to get hit with the Failure to Pay penalty, which adds an additional 0.5% of the total tax balance due every month (up to 25%) for each month the tax debt goes unpaid. And then there’s the interest (between 3% and 9%, calculated every day the tax debt goes unpaid).
  • You missed the deadline, you owe and you can’t pay – the Tax Trouble Triple. Now you’re getting hit with both the Failure to File and the Failure to Pay penalties, plus the interest. That tax bill you couldn’t pay is now getting bigger each month that passes.

As tempting as it may be, the absolute worst thing to do is to do absolutely nothing. That growing tax bill won’t just magically disappear. Even worse would be to go off the tax grid – stop filing and paying taxes altogether. The IRS and state taxing authorities will find you and will stop at nothing to collect what they say you owe. Wage garnishment, tax liens, bank levies, MVA holds on your license – all are tools in their collection toolbelt.

Yet, all is not lost. If you find yourself in a position with unpaid tax debt, mounting penalties and interest, you do have some options. If the amount is in the “reasonable” ballpark, you may be able to DIY the situation. Contact the IRS or your state directly. Ask about payment plan options or installment agreement availability to pay tax debt. The IRS has an online process for setting up installment agreements for tax debt under $10,000.

But maybe your amount owed is over $10,000. Maybe you haven’t filed your tax returns lately. Perhaps things have gotten out of hand and now you have several years of unfiled tax returns, mounting interest and penalties and owe tens or even hundreds of thousands of dollars. You need the help of a licensed professional. That’s where we come in.

One Last Thing

The team at Strategic Tax Resolution are your trusted local tax resolution experts. We handle the IRS and State taxing authorities on your behalf, working to negotiate the best possible outcome for you. Strategic Tax Resolution has the experience to customize a resolution plan for your unique tax situation. You’ve got a guy on your side. Contact us today – 888-339-4914. Get Relief!