It’s the tax season again, which is unpleasant for some people, reminding them that they still haven’t paid their outstanding balance for the previous tax year. There are many reasons why you might owe the IRS.
Maybe you haven’t withheld enough cash from your salary; maybe you have chosen freelance and haven’t set aside enough money for quarterly assessments.
Maybe you’re too busy (for example, driving for Uber) and you don’t even realize that you should pay estimated taxes every quarter.
Perhaps you are accustomed to getting a certain amount of tax each year as a tax refund. The Tax Reduction and Employment Act increases your monthly salary with cash and unexpected tax forms.
No matter how you find yourself bearing IRS debt, there is only one good way to get out of the way: contact the IRS over the phone or online and develop a payment plan.
As Michelle Singletary explained in the Washington Post:
If you owe federal tax and cannot pay it, the first thing you should do is call the IRS.
Do not dial the number you see on the TV screen or the number you hear in the radio ad. Make IRS your first stop so you don’t fall victim to the scam.
Because, contrary to what commercial ads claiming for quick relief, private companies are unlikely to reduce your taxable debt to a few cents.
If you have unpaid taxes, the IRS will send you a notice of the balance due in the mail. Remember: the IRS will never call you to discuss unpaid taxes. If you get a call from someone who claims to be the IRS, they are a liar.
Your due balance notice will include instructions on how to contact the IRS and start paying your tax bill.
You can call the IRS directly to discuss options, or you can request a payment plan online. You can also apply by mail (using Form 9465, installment agreement request) or visit the IRS walk-in office.
In many cases, the IRS will allow you to pay off your balance in installments; in some cases, you may even be eligible to reduce your tax bill (this is called a “compromise“).
You can also request a temporary delay in payment until you can better afford it.
The important thing to remember is that you must contact the IRS and find a way to resolve your unpaid tax balance.
If you ignore the due notice, the IRS may overstate your salary to collect the arrears-not to mention that unpaid tax bills will incur both interest and fines, so you should close your bills as soon as possible.
So call the IRS. Today, if possible. Or, if you don’t like the phone, start setting up a payment plan online.