The IRS has been running a series called “IRS Tax Tips” since January 1, 2011. In their most recent iteration, the IRS covers a topic near and dear to us at M. Robinson & Company, P.C.
“Read This if you Need More Time to Pay Your Taxes” (IRS Tax Tip 2011-64, March 31, 2011; click here to read it). Also see this: Filing Late and/or Paying Late.
The IRS covers the major options you have: a short-term deferment; an Installment Payment Agreement; and an Offer in Compromise. The question is: if you have difficulty paying your taxes on time, can you resolve the matter yourself or do you need to hire an attorney? The main issue from our point of view may be how much money you owe. Generally if you owe less than $10,000 to the IRS, and there is no legitimate basis to think that you don’t actually owe it, you may be able to handle it yourself. The “Online Payment Agreement” (see item number 7 on the IRS Tax Tips page) may be approved up to a certain dollar amount without a detailed check of your finances.
However, the IRS advises taxpayers that they may be better off to borrow the money from a bank and pay their taxes immediately because the IRS may charge a higher interest rate than the bank would charge on a loan. See: How Borrowing Money to Pay Your Taxes Could Cost You Less Than an Installment Agreement.
Our disclaimer should be emphasized here. Every individual situation is different. For example, even if the amount at stake is fairly small, you may need to seek assistance if you simply don’t know how to fill out the tax forms, or if there are other financial consequences for you. This blog post provides important information to begin the process of thinking how to resolve a common problem.