If you can not pay the tax due here are some recommendations:
1. A timely return should be filed, a late return just adds to your trouble. Can not pay the full amount when you file the return?
Request an extension of time to pay using form 1127.
Form 1127 is filed when taxes cannot be paid on time. It gives up to six months from the due date to pay the tax owed. To use this form you must be able to show that you cannot borrow money to pay the tax bill except under terms that would cause severe loss and hardship. Late payment penalties are excused when an extension is granted, you will still owe interest on the late tax paid.
Request and installment plan using form 9465
Form 9465 Installment Agreement Request can be filed with the income tax return or with the payment due notice. Think of this form as a short form loan application. The IRS should respond with an acknowledgement letter within 30 days. You will also receive a notice of balance due to legally verify the amount of the liability. If the installment agreement is accepted you will receive an agreement to sign. You will be required to pay a fee of $43.00 to set up the plan. If you plan must changed or reinstated there is a fee of $24.00. You will receive monthly notices of the payment due.
If the amount due is over $10,000 and you need more than one year to pay, other things may happen. Your case may be sent to a revenue officer in your area. A tax lien may be filed. The revenue office may ask for more forms and documents. They may ask you to prepare a Collection Information Statement for Individuals form 433-A, if you are self-employed you will also need a Collection Information Statement for Businesses form 433-B. Instructions are in Publication 16728N, available from the IRS by mail or phone. Other documents will be requested by the Internal Revenue Service, as part of the processing of your agreement.
2. Collection action is pending, a bank or wage levy has been issued and you want it released.
In order to get an installment plan there are some rules. You must have filed all returns, including any returns the IRS filed for you.
You should be prepared to give information contained on form 433-F, form 433-A both of these forms have information that will be used to determine how much you can pay each month. Current bank accounts and employment will be verified. Only one of these forms are used. If you are self-employed form 433-B will also be needed. You may not be required to mail this information, if possible IRS will accept the information by phone.
Some important things to remember:
1. The person on the phone is doing a job, be polite, don't raise your voice. If you can not get anywhere with the person on the phone, hang up and call again, or ask for a supervisor.
2. Don't argue about the amount of the tax or the penalties. You want some help, not a debate. After a payment plan is set up and the levy release on the way, ask for an account history to be sent to you. You can check the tax and submit a request to waive penalties, for cause, later.
At 1-800-FileTax we don't think our clients and friends are criminals. We know thinks happen in life that cause serious harm. You will enjoy our no-guilt, no-attitude service. At 1-800-FileTax all our preparers are trained accountants or enrolled agents. We have been preparing tax returns since 1947. After preparing over 25,000 tax returns we learned a trick or two.
E-mail us and give us some background information and we will call you. You can call 1-800 File-Tax and talk to one of our representatives. If you have a bank or wage levy, time is against you, act now.
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