Owing back taxes to the IRS is not a good situation. And something that can make it worse, very quickly, is the penalty that you accrue when you owe the IRS. No matter what you owe, you will always have interest and penalties on any back taxes. There are three different types of penalties that the IRS may charge you.
- The Failure to File penalty will be calculated on the time that elapsed between when your return was due, and when you actually filed. You can avoid this penalty entirely by filing on time, even if you don’t have the money to pay what you owe.
- A Failure to Pay penalty is calculated on the amount that you owe. This penalty is calculated every month that you continue to owe taxes and can add up quickly.
- The IRS will also charge you Interest on what you owe. This is calculated daily on your unpaid balance and also adds up quickly.
IRS penalties may seem like a hopeless situation, especially when you don’t have the money to pay your tax, in the first place. However, if you have a good reason for not being able to pay, you can have your penalties reduced, and possibly removed. Levy and Associates can help you with tax resolution and see if you qualify for Penalty Abatement. We have years of experience in negotiating with the IRS, and will work with you to request a Penalty Abatement. The sooner you call us, the sooner we can help you fix your current tax situation.