Dealing with High Tax Bills

Paying taxes can be a daunting and emotional time, especially if the taxpayer does not have the money available at the time to pay the balance of their taxes to the Internal Revenue Service. What one has to think about is whether or not they should request an installment payment plan from the IRS or an Offer in Compromise from the IRS. These two types of payment plans can also be used for people that have extremely high tax bills but cannot pay the balance all at once. The only problem is that since the bill is not paid in full it will be gaining interest with each passing day. The options for paying your tax bill to the IRS include credit cards and debit cards, direct debit, personal check, money order, installments, online payments or Offers in Compromise. If you decide upon a direct debit then you can file your taxes early, like in February, but not pay until April 15. This is done by e-filing a return. You can choose the date you wish to pay the balance of the taxes due to the IRS. A personal check or money order is used when filing a paper return via the mail. On the check you should write your social security number and make the check payable to the United States Treasury.

There are four requirements when applying for an installment payment plan with the IRS when paying the balance of your taxes:

1. The amount you owe must not exceed $10,000
2. You have filed all required returns on time and have not used an installment plan within the past five years
3. The IRS determines that you cannot pay the entire amount due and you give the IRS all of the information they need to come to this conclusion
4. You must agree to pay the bill within three years and comply with the tax laws while the agreement is in effect

When applying for an installment payment plan one must know that interest, late payment penalties, and a processing fee does apply to the balance owed. For new agreements, the processing fee is $105 but the fee is reduced to $52 if you make your payments be electronic funds withdrawal.

The Internal Revenue Service also has an online payment agreement plan for taxpayers. The requirements for qualifying for this service are that all forms have been filed on time and the forms were filed accurately. Another way to qualify for the online payment agreement is to owe less than $25,000 in combined tax, penalties, and interest. If you have more than $25,000 in the above mentioned areas you will more than likely need to file a Collection Information Statement Form 433F and the Form 9465. Mail these forms to the IRS before applying for an online payment agreement. There are three online payment agreement plan options once a taxpayer has been approved for this service. Those three options are:

• Pay the amount of the balance in full
• Ask for a short-term extension
• As for a monthly payment plan

Taxpayers should know and understand that every payment option provided by the Internal Revenue Service comes with interest, penalties, and processing fees. The interest will be applied to the balance of the money owed to the government for each passing day that the balance is not paid. This will add more money to the amount that you owe to the government each time you pay the bill. Also, if you fail to any of the installments on time you will be charged a late payment fee.

• If you are having trouble with taxes and the IRS, consult with a tax attorney in your area today. They will be able to negotiate on your behalf and protect you from high tax bills.