By: Law Office of Ray Haselman

What if I Owe More Than I Can Afford to Pay?

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When the IRS is claiming that you owe more in taxes than you are prepared to pay, it can feel like a big deal. Don’t panic. While often the system can feel like the cards are stacked against you, it also has fail-safes in place that assure owed taxes aren’t the financial ruin of cash-strapped individuals.

While there are penalties for non-payment, there are steps that can be taken to avoid getting to that step in the first place. While each individual situation deserves to be looked at specifically by a tax expert, there are a few common routes that taxpayers can take when struggling with IRS woes.

Can I Set Up a Payment Plan Through the IRS?

The IRS offers two types of payment plans for taxpayers who are unable to make their full payments on owed taxes – short-term or long-term.

Short-term payment plans: The IRS will grant up to 120 days to come up with the full payment if you owe less than $100,000 total in taxes, penalties, and interest.

Long-term payment plans: The IRS offers a Direct Debit Installment Agreement (DDIA) for an extended period to allow a taxpayer to pay in full. This is only available to those who owe less than or up to $50,000 in combined taxes and fees.

What Other Options Are There?

An OIC, or “offer in compromise,” is another option that the IRS allows for people who owe more taxes than they are able to pay. This offsets tax debt by letting the taxpayer pay a reduced sum if paying the entire sum would put the individual in financial distress.

Another option is to delay collection. If a taxpaying individual or entity is unable to maintain their basic monthly needs and expenses, they may be able to request that the IRS temporarily suspend their collection measures until they are financially stable enough to produce what is owed.

If the IRS has added penalties, you may be able to lower the amount you owe them by requesting a first-time penalty abatement program. If penalties weren’t added to your account for the previous three years, you’ve filed your returns properly, and made arrangements for due taxes, you may qualify.

What Are the Penalties for Non-Payment?

If a taxpayer fails to pay their back taxes without providing substantial reasoning in the eyes of the IRS, there are several possible penalties that individual may encounter:

  • Failure-to-pay penalties
  • Property liens
  • Seized assets or property
  • Garnished wages
  • Levied financial accounts

If I Get in Trouble, Can a Tax Attorney Help?

If you’re reading this, you may be searching for answers. If you are looking to speak with someone who is willing to give you a consultation and assist you with your financial woes, call us at 786-522-0410 to schedule an appointment.