There's the version of tax resolution the late-night commercials sell you. Then there's how it actually works. I'm Darrin Mish, a Tampa tax attorney. I've spent 32 years on the inside of these cases. Here's the real version.<\/p>\n
In my previous article, I shared two tips for last minute tax filers. \u00a0Click here to read or watch more IRS Help resources.<\/a> \u00a0Here are two more tips.<\/p>\n File now but Pay later<\/p>\n If unfortunate circumstances hit you at the time you need to pay your taxes causing a cash shortage at the crucial time, you should till file your taxes even if you cannot pay anything.\u00a0 Using the Online Payment Agreement Application or calling 800-829-1040, you can request for an extension of time to pay up.\u00a0 You can be granted between 30 and 120 days to pay your taxes with penalties but the IRS says you would usually end up paying less in penalties than you would paying your taxes in installments<\/a>.<\/p>\n If you file your tax returns but do not pay what you owe, you will be charged 0.5% failure-to-pay penalty on whatever is outstanding per month up to a maximum of 25% of your total tax bill.\u00a0 On the other hand, if you do not file your tax returns, the penalty is more severe.\u00a0 You will be charged 5% per month of your tax bill up to a maximum of 25%.\u00a0 If you still have not filed your returns within 60 days of the due date plus extensions, you will be penalized at least $135 or 100% of your tax debt, whichever is lower.<\/p>\n If you owe $3,000 and you do file your tax returns within the deadline but only pay 3 months later, your penalty would be 0.5% of $3,000 a month for 3 months which amounts to $45.\u00a0 But if you fail to file your returns within the deadline and file it and pay your debt in full 3 months later, you would have to pay 5% of $3,000 for 3 months which is $450.<\/p>\n Apply for an Offer in Compromise<\/a><\/p>\n An Offer in Compromise<\/a> is a provision in the tax code whereby you are forgiven of your tax debts.\u00a0 As you can imagine, it would be extremely difficult to obtain an Offer in Compromise for your entire tax bill.\u00a0 To successfully obtain an Offer in Compromise, you have to qualify for it.\u00a0 Basically, you need to show that you have used up all your resources to pay your tax bill and are not able to pay it in future as well.\u00a0 Usually, this would only apply to the elderly or disabled.\u00a0 However, you can still try making an application but it is advisable for you to consult a tax attorney because the requirements are stringent and documentation needed is voluminous<\/a>.\u00a0 For example, you need to provide receipts of your living expenses over the last 3 months and list down all your assets and their values.<\/p>\n