7 Common Mistakes People Make When They Owe The IRS

If you receive a tax bill for $10,000 or more, and you owe the IRS, you might be shocked and frozen: what steps should you take? In your frustration, you can easily make disturbingly common mistakes that could even cost you more down the road. Read on for these common errors and how you can avoid them.

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One: Paying Taxes with a Credit Card

Unless you plan to pay off your credit card immediately, you should avoid what you owe the IRS with your credit card. You will not only pay the interest rate, which could be high, but you will pay an additional convenience fee.

Two: Failing to Ask for an Extension

You can ask for as much as 120 days to either pay off what you owe the IRS, either the balance in full or to set up an installment agreement.

Three: Failure to Set up an Installment Agreement

You do not need to pay off the entire balance at once; you can set up a payment plan on what you owe the IRS

Four: Failing to Document Phone Conversations and Keep Correspondence 

Date phone conversations, and take notes of what you discuss. If the IRS sets up a payment plan with you or makes any other agreements, have the agency send you confirmation in writing. Keep copies of everything that you send the IRS and everything that they mail you.

Five: Failing to Ask for a Fresh Start   

If you do not file your taxes at all, you will be charged a failure-to-file penalty at .5 percent per month that can easily increase your tax bill by 25 percent. However, if you owe less than $50,000, you can apply for the Fresh Start program and have the penalty waived for a maximum of six months when you owe the IRS.

Six: Failing to Ask for an Offer-in-Compromise

If you  owe the IRS less than $50,000, you might qualify for an offer-in-compromise. While you first need to exhaust all other options, the IRS will consider an OIC based on income, assets, ability to pay and expenses. When you owe the IRS, the OIC option is a great deal for taxpayers who simply cannot afford to pay.

Seven: Failing to Get Help

The higher your tax debt, the more important it is for you seek professional advice. Our tax resolution specialists in Denver can provide you with seasoned help to minimize your tax obligation, set up a payment plan or look at other options. The sooner that you contact us to discuss what you owe the IRS, the sooner we can help you resolve the matter. If you owe the IRS more than $10,000 in taxes, and you are seeking help, contact our professionals at 720-398-6088.