Senate Majority Leader Harry Reid, D-NV, declared in that the U.S. has a "
voluntary tax system," because you can choose not
to pay if you're willing to face government consequences. Though a small population of Americans
have divested themselves from IRS codes, a vast majority will be certain to have their 1040 forms
completed by April 15. The months leading up to tax day can be a stressful time for Americans
needing to fulfill their civic duty, especially when they do not have enough money to pay Uncle
Sam. Here is some advice that can help you get through tax season with as little stress as
possible.
File For Extension
Contrary to what many believe, it is not a jailable offense if you cannot or do not pay what the
IRS says you owe by the deadline. Instead, you can file IRS Form 4868, which is an application for
an automatic extension of time. This extension can also be filed electronically with most tax
preparation software. Keep in mind the extension of time is simply a way to tell the IRS you intend
to pay, but cannot do so at the present time. Interest will accrue and penalties may be assessed.
It is best to send in as much of what you owe as you can, along with the extension application.
Get Help
If filing on your own is completely over your head, there are tax experts and accountants at
H&R Block, who can debunk the technical language and point you in the right direction. You
could even have a refund coming to you that you didn't know about. Filers can access
live support through H&R Block's online filing system.
Payment Plan
The IRS offers very flexible payment plans. An agreement can be entered online if your total
bill, including penalties and interest, is less than $25,000. The interest rate on the plan is
usually 3 percent. If your total bill is greater than $50,000, an IRS Form 9465 must be filled out,
along with Federal Form 433-F, which is a statement of finances.
Offer In Compromise
Though TV ads will encourage you to retain a lawyer for this, an
Offer in Compromise can be negotiated
just between you and the IRS. An OIC will allow you to settle your tax debt for less than the total
amount owed. An application and a fee must be submitted, along with a statement as to why the
settlement should be accepted. These offers are rarely approved, but it's worth a try in certain
situations.
Currently Not Collectible
There are some people who have no means of paying taxes or any other bills. A taxpayer can
gather evidence consisting of proof of homelessness, extended unemployment, or other extenuating
circumstances that show a complete inability to pay anything. The IRS can then declare the
applicant "currently not collectible" (CNC) which will stop all garnishments, levies and other
collections activity. CNC's will still receive a statement annually telling them what they owe.
There is a statute of limitations on tax bills of 10 years. The amount owed will ultimately be
erased if the CNC can stay in that status longer than 10 years.
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