3 Steps to Avoid Disaster When You Can’t Pay Your Taxes

August 30, 2020

Living week to week through the current pandemic environment is tough enough, let alone trying to find cash to pay for last year’s tax burden. Whether you are unemployed, underemployed or uncertain about what the future may hold, there is little doubt that life isn’t as easy as it once was.

YOU ARE NOT ALONE

Each year, the IRS discloses the number and amount of penalties assessed for failing to pay taxes. During fiscal year 2019, according to Table 26 of the Internal Revenue Service Data Book, the IRS assessed 18,809,087 failure to pay penalties, totaling $6,225,366,000. Yes, you read that correctly, over 18 million penalties assessed for a total of just over $6 billion. These penalties were just on individuals, trusts and estates, not including business entity, employment or excise taxes.

YOUR LIFE MATTERS

You do not need to live in fear of a government agency tasked with collecting past due taxes. You have options to address your tax problems, but they will require you to take action. We cannot rewrite history, but we can make strides for a future worth enjoying.

3 STEPS TO AVOID DISASTER

1. Acknowledge and respond to any and all notices received from the IRS or any other tax agency. Very seldom will ignoring a tax issue result in a favorable outcome. Many tax issues have specific, time-sensitive deadlines to adhere to in order to keep your taxpayer rights protected. Failing to comply within the timeframes may increase the amount of penalties and interest.

2. Recognize your limits and proficiencies in respect to tax matters. The tax code and collection administration can be a confusing and intimidating subject area for many people. In order to have your issue addressed in an efficient and effective manner, we recommend you seek professional guidance and/or representation from qualified professionals with experience in this area of practice. As entrepreneurs ourselves, we are proponents of the DIY spirit; however, tax collection administration and planning issues may be best suited for those with specialized training and expertise.

3. Resolve your tax issue and get it behind you. Whether your circumstances and planning qualify you for an Offer in Compromise, Installment Agreement, CNC Status, Penalty Abatement or other collection alternative, take an action to secure your future and get the tax issues of the past off your back.

To get help with an IRS tax problem, or learn about tax-saving strategies for business owners, contact me at (360) 474-5892 or e-mail me at tate@ensigncpa.com.