Tax season always seems to be looming around the corner. This is especially true if you’re also worried about how you will pay your tax bill. Not paying taxes is illegal and there are a lot of negative consequences. The longer you leave your tax bill unpaid, the more problems you’ll encounter. But there are steps you can take if you cannot afford to pay your taxes. If you expect financial difficulties as the deadline nears, it’s best to start planning now.

One thing you must remember is that you can’t hide from the IRS. If you cannot afford to pay taxes, it is still recommended to file your tax returns.

Consequences of Failing to Pay Taxes

Late Penalties and Fees

Failure to follow IRS regulations can give you more expenses than you can handle. The longer these bills go unpaid, the bigger the penalties will be. Waiting too long to settle your tax bill and any penalty or fee associated will lead you to a financial monstrosity that will make you rethink all your decisions.

There are four penalty categories from the IRS:

• Failure to file on time

• Failure to pay on time

• Failure to pay tax estimate

• Dishonored checks

Failing to file and paying late are considered upfront penalties. If you cannot file your taxes within the deadline, the IRS will impose a failure to pay penalty. Sometimes, failure to file taxes can also lead to charges of fraud. There is also a penalty for late payment despite being able to file on time. However, penalties for late payment are less severe than penalties for not filing.

The IRS will continue charging interest and penalty fees until you pay your balance in full. The underpaid balance will be charged interest while overpaid balances will be paid interest. The specific interest rates can vary per year. Currently, underpaid balances are charged 5% of what you owe per month. It is possible to waive these penalties and you would find services for these offered by tax relief companies.

Audits

Another consequence of not paying taxes is an IRS audit initiated because of suspicious activities. If you underreport your income or claim suspicious deductions, the IRS will be flagged and may start an audit. If you did not file your taxes, you could also be on the list of taxpayers to audit in the future.

Audits involve federal employees digging into your personal finances. An IRS audit ensures that you provide the authorities with correct figures. The process is time-consuming and stressful and could require you to pay back taxes. If you received a notice for an audit, you’ll want to have an expert to help you get through it. Tax relief companies also offer services such as audit representation to assist taxpayers.

Late/Lost Tax Refunds and Reimbursements

Aside from additional expenses, failure to file or pay taxes within the deadline can also mean that you won’t qualify for tax reimbursements or refunds. This is especially true if you did not request an extension to file or pay taxes. The majority of the cases will have their refunds and reimbursements delayed. But you don’t want to risk anything when it comes to the IRS.

Severe Cases

In more extreme scenarios, failing to file or pay taxes on time can call for criminal charges and arrest. The longer you fail to pay the IRS, the more serious these violations become. The IRS may place a levy on your bank account, a lien on your property, or garnishment of wages. No one wants to be placed in these situations.

What Can You Do?

Not having the financial means to pay your taxes and their consequences is a scary thought. However, it’s important not to be bound by fear and to find a solution to your situation. Do not panic as there are appropriate steps you can take to prevent the worst from happening.

1. File your taxes

Although you know you can’t afford your tax bill, it is crucial that you still file your taxes. The IRS will appreciate taxpayers who are honest with them. Make sure you comply with the requirements to the best of your ability.

2. File an Extension

Since you know you can’t pay on the deadline, you can request a payment extension from the IRS. For taxpayers who foresee problems with paying their bills, an extension is a next step after filing taxes. Requesting an extension shouldn’t be very difficult since it’s available on the IRS website. If you need additional help, you can also go to a tax relief company for expert advice.

3. Pay in Installments

If you can only pay a portion of your tax bill, you can also work out a payment plan with the IRS. You need to complete Form 9465 if you want to pay in installments instead of in full. The timing of submitting this request is important but you can also do this after you file an extension.

4. Tax Relief Companies

Sometimes, even with all the resources from the IRS, you would still feel the need for additional assistance. Tax problems are not easy to deal with, which is why there are tax relief companies that offer their services. They have tax experts and professionals who can help individuals and even businesses who find themselves in a precarious position with the IRS.

Below are some tax relief companies we recommend.

Anthem Tax Services

Anthem Tax Services is an accredited tax services company that has helped clients with their tax dilemmas. They now offer remote services so clients can consult with them without the need to leave their homes. You can call them or reach out through the website and they will quickly get back to assist you with your tax concerns.

 

Services offered:

• Bookkeeping

• Tax law

• Tax preparation

• Tax resolution

• Tax relief

• Offer in compromise

• Fresh start forgiveness

 

There are certain life events that we cannot predict which can lead to financial difficulties. When it comes to taxes, what’s important is to ensure you comply with the IRS regulations and requirements as much as possible. The IRS has several options to make the tax process easier for taxpayers. If you cannot pay your tax bill in full and on time due to problems, you should look into some of these options. You can request an extension to pay, work out a payment plan, or even negotiate a way to eliminate penalties and fees for late payment.