Owe IRS Under $10,000 – Here is what to do.
If you owe the IRS under $10,000 – Here is what you should never do. Do not call one of those “tax resolution” firms that advertise so heavily on radio, television and the internet. They will charge you up to $3,000 to get you something that you can get for free from the IRS. The IRS offers an automatic three year installment agreement on your terms. No financial questions asked, no federal tax lien or tax levies, just a fast easy resolution to your tax debt problem.to do.If you owe the IRS less than $10,000 in unpaid personal income tax debt, then you can obtain what is called a “Guaranteed Installment Agreement”.
Call the telephone number in the upper left corner of your bill (or call 800-829-1040). Explain that you want to set up a Guaranteed Installment Agreement. As long as you can pay the entire tax bill within 36 months and can pay at least $25 per month in payment, they are required to give you the payment plan by law.
If they start asking about your income and expenses, inform them that the law does not require you to provide this information for a Guaranteed IA (actually say “IA” — they’ll think you know what you’re talking about).
At the same time, if this is your first time owing back taxes, be sure to ask for the “first time penalty abatement”. Explain you made an honest mistake or just didn’t have the money, and they’ll usually alleviate the penalties if it’s a first offense. “First offense” generally means you’ve had a clean federal tax history for at least three years. This applies to the failure to file the return timely penalty which can be as high as 25% of your tax debt or the failure to pay penalty which can also be another 25% penalty.
If you need help, RMS Tax Consulting offers an hourly consultation rate to answer questions and give advice just for cases under $10,000. Call us anytime at 520-448-3531.