It’s still early in 2023, and not too late to discuss the origin of Owe the IRS money – resolve a tax problem resolutions.

So, where did the concept of a new year’s resolution come from?

• The source of making New Year’s resolutions rests with the Babylonians, who were the first people to make promises to the gods in hopes they’d earn good favor in the coming year.
• The Babylonians were also the first civilization to celebrate in honor of the new year. The new year intertwined religion, mythology, power, and socioeconomic values.

In 2000 BC, the Babylonians celebrated the New Year during a 12-day festival called Akitu (starting with the vernal equinox). This was the start of the farming season to plant crops, crown their king, and make promises to pay their financial obligations. But unfortunately, the Babylonians were the first to break their resolutions, which is why there are no longer any Babylonians.

Let’s move ahead to 2023’s resolutions and the ten most common promises many individuals make yearly.

The eleventh is committing to getting your tax life in order so you can fulfill your other resolutions.

• Eating healthy
• Get organized
• Learn a new skill or hobby
• Live life to the fullest
• Manage money better
• Quit smoking
• Spend more time with family and friends
• Travel more
• Owe the IRS money – resolve a tax problem

In past years, I made the same two or three resolutions that I never kept:

1. Get healthier- join a yoga studio 🧘‍♂️
2. Eat healthier – I was a pescatarian 🍤🍣, find more variety
3. Stop interrupting Jeff when he talks… Yeah! Like that’s going to happen. 🤣

Okay, so this year, there was a bit of a change:

• I added meat 🐄, 🐖, 🐣 back in my diet in mid-2022, after 15 or so years, and I gained weight, so now I have to lose weight, as there are more calories in steak than salmon.😫
• I did join a yoga studio and ended up with back pain after practicing for two months.
• Stop interrupting Jeff when he talks… Yeah! Like that’s going to happen. 🤣 Nope! That didn’t happen, but I’ll keep it on my list for shits and giggles.

Enough about my resolutions. Let’s talk about commitment. One definition of commitment is an agreement or pledge to do something in the future. That leads right to the question, “I owe the IRS money,” what do I do?

Owe the IRS money – resolve a tax problem – Let’s consider:

• If you do not pay your tax in full when you file your tax return, you’ll receive a bill for the amount you owe, plus penalties and interest (see below). This bill starts the collection process, which continues until your account is satisfied or until the IRS may no longer legally collect the tax; for example, when the time or period for collection expires.
• The failure-to-pay penalty is equal to one-half of one percent per month or part of a month, up to a maximum of 25 percent of the amount still owed. The penalty rate is cut in half — to one-quarter of one percent — while a payment plan is in effect. Interest and penalties add to the total amount you owe.
•  In the past, the amount of tax you owed was a significant factor in determining whether your credit score would be affected. This is because your credit was only affected once the IRS filed a Notice of Federal Tax Lien in court. In 2017 the three credit bureaus began removing tax liens from credit reports. However, they appear in public records, so anyone who looks can find them (i.e., creditors, employers, etc.).

The agency may also issue tax liens against your property. A federal tax lien is the government’s legal claim against your property when you neglect or fail to pay a tax debt. The lien protects the government’s interest in all your property, including real estate, personal property, and financial assets.

A federal tax lien exists after the IRS. (irs.gov)

• Puts your balance due on the books (assesses your liability);
• Sends you a bill that explains how much you owe (Notice and Demand for Payment); and
• You Neglect or refuse to pay the debt fully in time.

Now, let’s move along to what you (or someone you know) should do if you

• owe the IRS money,
• have back tax returns that you have ignored,
• don’t have the money to pay the Internal Revenue Service,
• and you don’t know where to turn for help.

What to do if you owe the IRS money

• you can expect a variety of penalties. Luckily, it’s not too late to act. The IRS offers ways to lower your tax burden and spread your repayment over time (as much as five years!)
• If you owe less than $50,000, you may be eligible for either a short-term or long-term installment plan, which allows you to make payments over 72 months (six years). What if you cannot afford to pay
• You might be able to find tax relief through what’s called an “offer in compromise.” OIC allows you to settle your back taxes with the IRS for less than you owe. According to the IRS, it may be an option if you can’t pay your tax debt or if doing so creates financial hardship.

If you owe back taxes and can pay it all in one payment, you probably don’t need help resolving it. However, suppose you want to negotiate the agreement’s terms and conditions or reduce IRS penalties or the amount owed. In that case, you will do much better with professional help, such as an EA and CTRS, unless you are comfortable negotiating with the agency and can successfully navigate the US tax system.

 

Head honcho of The Tax Relief Company, Jeffrey Schneider, EA, CTRS, ACT-E is your best bet. His superpower is negotiating with the IRS; over the years, he has settled cases for well less than a client has owed.

• For example, one client hired Jeffrey because she was paying $750 a month on an installment agreement. But she was struggling and unable to make the payments. So, Jeff did his thing, negotiated with the IRS, and was able to get the amount reduced to a comfortable $250 per month. As a result, the client was happy and has since paid off her agreement.

Owe the IRS money, and you want to resolve a tax problem or know someone that does? Then, contact us today, and let us help you get your life back on track.

 

Ali” watching what I eat” Schneider
Director of Business Development