Do you owe taxes but don’t have the money? Are you afraid of the tax trouble it will cause? Not sure what to do about this tax problem? Before you panic and worry yourself to death, know there are options available to address this tax situation. Be forewarned, not choosing an option and avoiding the tax issue could result in the IRS filing a Federal Tax Lein against you.

Here are 10 tax tips from the IRS for taxpayers who can’t pay taxes in full:

1. The IRS strongly encourage taxpayers to pay as much of the tax as possible. This will minimize the tax liabilities because the amount of interest and penalties owed will be less.
2. Each taxpayer’s situation is different, but some may qualify for a tax extension, a temporary delay, a payment (installment) agreement or an Offer in Compromise to satisfy the tax debt.
3. Taxpayers who need more time to pay the full amount should contact the IRS immediately about the tax problem using the phone number or mailing address printed on your tax bill.
4. A good tax tip is to consider getting a loan from a bank or finance company. The interest and fees will be lower than the interest and tax penalties imposed by the Internal Revenue Service.
5. Taxpayers who can’t pay the full amount of the tax could qualify for additional time, up to 120 days, to pay the tax debt in full. The advantage of this tax payment arrangement is that there is no fee and minimizes the interest and tax penalties.
6. Taxpayers who can’t afford to pay their taxes within 120 days should consider an installment agreement. There is a one-time fee of $105, an additional fee of $53 for direct deposit.
7. To apply for an installment agreement you can use the Online Payment Agreement application available on the IRS website; file a Form 9465, Installment Agreement Request; or call the IRS at the telephone number shown on your bill.
8. Even if you set up an installment agreement, the IRS may still file a Notice of Federal Tax Lein to secure the government’s interest until you make the final payment.
9. Taxpayers with serious financial hardships and limited income may be able to settle their tax liabilities for less than the full amount owed through an Offer in Compromise with the IRS. But be aware, if the IRS believes you could settle your tax debt in a lump sum or with payments, chances are you won’t qualify.
10. The top tax tip for taxpayers who can’t pay the full amount of taxes is to always respond to an IRS notice. If you disregard or fail to respond to the IRS notice, and do not make payments arrangements to pay your tax liabilities, the IRS is entitled to take collection action.

Taxpayers who can’t pay their taxes in full should heed the tax tips outlined above. The worst action a taxpayer could make is to avoid the issue altogether. Even though it’s a hard thing to do, call the IRS and arrange a tax payment arrangement to pay off your tax liabilities.

More information on the collection process is available at http://www.irs.gov.

Source: irs.gov

One of the most common income tax questions is what will happen if I fail to file a federal income tax return.

First of all federal income taxes are based on the amount of tax due. So if you don’t owe any taxes, no penalties are due.

However, there is a civil penalty for failure to file a timely return. According to one income tax attorney, the civil penalty is generally between 5.0% and 25% of the amount of tax required to be shown on the federal tax return per month. In addition, there is an additional civil penalty for failure to pay the tax actually shown on the federal tax return. This is between .05% and 25% of the tax amount due each month. Income tax lawyers state the two penalties are computed together in a complex algorithm that makes estimating the actual penalties a challenge.

According to some estimates approximately three percent of taxpayers avoid the process of income tax preparation and do not file an income tax return at all.

In cases where a taxpayer does not have enough money to pay the entire tax bill, the Internal Revenue Service can work out a payment plan. Tax experts recommend that people in this position should at least consult with an income tax attorney to explore their legal options regarding the overdue tax debt.

There is no statute of limitations on civil actions by the IRS for years for which no return has been filed.

For each year a taxpayer willfully fails to timely file an income tax return, the taxpayer can be sentenced to one year in prison.

Taxpayers who have not filed income tax returns are recommended to meet with their accountant or an income tax attorney.

source: wikipedia.com

Every year, American taxpayers perform income tax preparation to file their federal income tax. Individuals and small businesses alike have income tax questions they can’t answer. The solution to this problem is to contact income tax attorneys, income tax lawyers, file online tax or hire an income tax service.

Which solution you choose is based on the complexity of your tax liabilities. Individuals without itemized deductions can use online tax software, an online tax service or do the online tax filing themself. Individuals who have itemized deductions may be better off served by consulting an income tax attorney, income tax lawyer or income tax service to get income tax questions and/or to complete the federal income tax forms.

For those who have unresolved tax disputes with the Internal Revenue Service, consulting with an income tax attorney obviously makes sense. The IRS has the right to withhold tax refunds, garnish wages and even liquidate personal assets to resolve federal income tax debts. Hiring income tax attorneys can be expensive but they specialize in the ability to arbitrate with the IRS . It is not uncommon to have an income tax attorney resolve the tax debt with the IRS at a discount. That tax debt discount is often agreed to be paid in installments instead of a lump sum payment.

Overall, individuals and small businesses are much better off hiring an income tax service or an income tax attorney than completing the forms via an online tax service because the income tax service and income tax attorneys are responsible for protecting their clients. Income tax attorneys and income tax services reputation is staked on the job they do.