Due to some circumstances, some people are confronted with the inability to pay their taxes to the IRS on time. As a consequence, they will be notified for tax debt which also has its corresponding penalties if not dealt with properly.
Penalties can occur if the person, upon notification, failed to give any response to the IRS about his condition. The penalties which will be computed by the IRS will come in monetary nature. These include penalties for the failure to file, failure to pay, and interests.
Failure to file penalty will be based on the deadline of your remittances to the date you actually filed for the returns. That will be 5 percent for every month that you fail to file until 25 percent. So, if you have more than 5 months of failure to file, the charge will automatically be 25 percent.
The penalty for failure to pay will be 0.5 percent of the actual amount payable by the person to the IRS. Opposite to failure to file, failure to pay penalty does not have any limit so the amount can go on for as long as the payment is not done. As for the interests, it will be done on a daily basis with the policies regarding the rate changing every 3 months.
You can opt for five ways to settle down your debts. First, you can go for an installment agreement which allows you to pay a certain amount every month to the IRS for relief. The other option which is called the partial payment installment will allow you to extend your time for payment so it will not be that difficult.
Offer in compromise allows you to pay a lump sum of money to the IRS to settle your account with less than your actual due. And if you are still unable to pay for your due, you may file for a not currently collectible agreement. Of course, you can also opt for bankruptcy if you want to be discharged from your debts.
If your debts go beyond 10 thousand dollars, it is advisable that you work with a professional to deal with your situation. Whether your hire an enrolled agent, an accountant or a tax lawyer, make sure your tax debt is dealt with by someone experienced, credible and customer oriented.
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