Thursday, January 22, 2009, AM | 1 Comment
On Jan. 6 2009, Internal Revenue Service – IRS – announced that it has taken new steps to help taxpayers struggling to pay their taxes during the deepening economic crisis.
With greater flexibility, IRS employees can work with taxpayers and temporarily suspend collection activity, including garnishing wages and other enforcement steps.
This is the second time IRS has eased its enforcement and collection efforts to help people in financial distress.
In December 2008, the agency said it will work to quickly resolve tax liens on homes if they prevent homeowners from selling or refinancing the property.
People who rely solely on Social Security or welfare assistance, recently lost a job, suffer from a major illness, or face high medical bills will be eligible for a tax break.
For people who will not be able to meet their tax obligations this year, the California Society of CPAs offers a few tips to curb the penalties and interest that accrue in such situations:
- Taxpayers who are current on their taxes now but fear they will not be able to pay up this year, they should file a tax return by April 15 anyway, then contact the IRS to discuss their options.
- Pay what you can when you file the return, then wait for a bill. This will buy you some time and help reduce the penalties and interest that you will be charged. It usually takes about 45 days to get a bill for the balance, perhaps enough time for you to get the cash to pay it off.
- Consider taking out an unsecured bank loan or tapping into a home equity line of credit. The interest will probably be less than the interest and penalties owed on the unpaid tax.
- Offer to pay in installments. The IRS is required to accept installments if your total tax liability (excluding interest and penalties) is $10,000 or less, and if you meet a few other requirements.
- Negotiate a compromise. The IRS may agree to accept an amount that’s less than what you owe if you meet certain criteria.
Visit IRS Website
For more details, visit the IRS website.
IRS related items:
- IRS e-File for Individuals
- Federal/State e-File for Taxpayers
- Authorized IRS e-File Providers for Individuals
- Free File Home
- Filing your taxes was never easier!