The Internal Revenue Service (IRS) is a powerful entity that can strike fear in any taxpayer. With recent legislation passed to add even more agents, the bureaucracy’s influence will only continue to grow.
Tax season is a stressful time with working Americans focusing on the traditional due date in mid-April. However, for many filers, tax issues continue long past the filing date, particularly for those who cannot foot the entire bill.
A variety of options
While not filing seems to be the best option, the lack of action will only make a bad situation worse. The IRS may levy penalties for failing to file. In addition, the unpaid balance could be subject to penalties that can grow to 25 percent of the outstanding balance, only making a bad situation worse.
Filing a timely return or an extension without payment can provide a certain amount of time to find the financial resources to pay what is owed. Filers should know that underpaying taxes may be subject to significant interest penalties. Other valid options include:
- Payment plans, also known as installment agreements
- Short-term extensions to pay the entire balance
- File an application for a hardship extension
- Secure a personal loan to pay off the balance
- Borrow from a 401k
- Pay with a debit or credit card
Advantages and disadvantages apply to all the options beyond making payment in full right away. Filing documents are as complicated as the entity that creates them. Tax law is not something to take on without the help of an attorney with experience and success in dealing with the IRS.