Reaching out to the IRS may seem like an intimidating endeavor, especially if you have not paid or filed your tax return this year – or in several years. However, if this is the case, the IRS actually does want to hear from you, no matter what the circumstances are. It’s always better to open up a line of communication with them before they contact you first, as their letters and warnings can add on to an already stressful situation. On top of this, there are many costly penalties involved for not filing, particularly if you owe back taxes to the IRS, and they will deploy a number of different strategies in order to collect the funds they are owed. But before you reach out to dial, here’s what you need to know before making that call.
Contacting the IRS
Once you realize that you haven’t filed or paid taxes, whether it was through a simple oversight or because you can’t afford to pay what you owe, the first thing that you should do is contact the IRS. They more than likely are aware of your lack of filing and are probably in the process of contacting you. It’s always better to open up the dialogue with them first, if possible, because this makes it seem as though you care, shows you aren’t trying to hide from them, and gives the appearance that you aren’t avoiding paying what you owe. Taking those first steps clearly shows that you’re making an effort to comply and clear your debt.
In addition, there are several different ways to contact the IRS. They have a toll-free 1-800 number that is staffed with helpful customer service representatives who can make notes on your account, answer questions, and go over everything that you need to know in order to make your late filing go smoothly. They are available from 7am to 7pm every week, Monday through Friday.
Also, you may have the option of meeting with an IRS customer service representative in person. There are local offices in the federal buildings in many medium to large sized cities. This may seem intimidating, because you’ll need to go through metal detectors and a thorough screening to get in. Plus, you’ll have to sit and wait a while in line to meet with an IRS employee. However, sometimes a face to face meeting, even an informal one, can help you come up with a solution to remedy your lack of filing and late tax payment. Like the phone lines, these offices are open during standard business hours during the week.
Requesting an Extension
Of course, your best bet, once you realize that you haven’t filed is to request an extension. It’s always better to do this before the deadline has passed, but you may be able to officially get an extension even if your return is late and you owe the IRS money.
What is an extension? This official request does exactly what it seems – it gives you more time to file your taxes and gather the money that you need to make a payment by pushing back your filing deadline. The IRS is allowed to grant an extension should you request one. You just need to alert them by phone or in person (as explained above) or have your official tax representative contact them for you.
If you have an extension in place, not only do you receive more time, but any penalties that you would have had to pay end up being negated as well. Otherwise, you could be penalized monetarily for filing late. There are several different penalties that the IRS could levy upon you and the amounts vary depending on how late you file your taxes.
As you’ll find, the IRS is very willing to work with you, as long as you are forthcoming with them. Filing an extension is the best way to show that you aren’t trying to avoid your obligations. You simply just need more time.
Do You Owe Money?
Owing money to the IRS is just as stressful as you can imagine. They will go to many lengths in order to recover any funds owed to them, including placing liens on your property, such as your home, your bank accounts, and any vehicles that you own. Additionally, if you avoid paying them for as long as possible, your passport and professional licenses may end up being suspended, until you settle up your tax debt.
With that said, if you work with them, the IRS is willing to help. For instance, when you file for an extension on your tax return deadline, it also pushes back the day that your payment is due. This not only gives you more time to file, but it also gives you time to collect or earn the money that you owe them. Plus, there are payment plans that you may be able to put in place as well. With a payment plan, you’ll have to pay interest, but that monthly payment can prevent the IRS from putting a lien on your property, as long as you implement the plan before they use any of their collection methods.
Remember that the IRS wants to work with you in order to collect the money that you owe them. While their reputation may be a bit daunting, they do actually prefer to make the process easier for you. As long as you are forthcoming, file an extension, and make efforts to contact them, everything will go much more smoothly. And while this process can be intimidating, as the IRS does have plenty of power, they aren’t really as bad as they seem.
You May Owe Penalties
The IRS levies a number of penalties on people who are late in filing their taxes, particularly if they owe money. These fees begin accruing the day after you miss your filing deadline, which is why promptness is key. So, if you file your return 60 days after it’s due, the penalty is $210 or 100% of any unpaid tax amounts due. Whichever amount is the lowest is what they’ll request from you, on top of anything that you already owe. Plus, if you go years without filing your returns, you could be charged $25,000 for every year of back tax amounts that you owe the IRS. As you can see, these numbers can add up very quickly.
Actionable Steps to Take
Once you realize that you are late filing your tax return and owe money to the IRS, there are several steps that you need to take. These proactive steps include:
- Gathering Your Paperwork – First, go through and find all documentation that you need in order to fill out your return. This includes bank statements, income statements and forms, information about any gambling winnings, interest earned on accounts, retirement accounts, and more. You’ll need as much information as possible in order to make your taxes as complete, thorough, and accurate as possible.
- Hunting for Missing Documents – If any documents are missing, now is the time to find them or request a new copy. If you’ve already filed for an extension on your deadline, then take this time to locate anything that you or your tax preparer may need in order to fill out your tax form. Any missing forms can delay the process further.
- Filling Out the Tax Forms – Once you’ve gathered all of your paperwork, it’s time to start filling out your tax forms. Contact your tax preparer so that they can get the process started before your extended filing deadline.
- Filing Your Return – The next step is the easiest – filing your return. At this point, even if your return is late, you do need to file it. Contact the IRS to let them know that you’re filing the return, because your participation is crucial to the process.
Before Your Reach Out To the IRS
Dealing with back taxes and the IRS can be a long, grueling, and complex process. Therefore, contacting a tax expert is the number one thing that you need to do before you reach out the IRS. As we’re made clear, many people are intimidated by the process and aren’t sure where to turn or what to ask. Although the IRS can be easy to work with, it helps if you have a tax professional in your corner who has plenty of experience with IRS dealings. So, before you make that call, choose a tax expert who can help you through every step of the process and keep your best interests in sight. You will definitely feel a sense of relief knowing that you have the professional tax assistance needed to communicate and negotiate with the IRS.
If you haven’t filed your tax return in several years or owe money to the IRS, the tax advisors at Enterprise Consultants Group can answer your questions, discuss your rights, and provide actionable options. Please contact us online or at (800) 575-9284 today to schedule a free and confidential consultation to see how we can help you.
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