| It's the moment you've been dreading: you missed filing | | | | having to pay in a lump sum. The IRS often agrees to |
| your taxes one year -- maybe you didn't have the | | | | let you pay your past year taxes over a period of |
| money, maybe you didn't have the proper documents, | | | | months, giving you a chance to catch your breath |
| maybe you just ran out of time -- and now the IRS is | | | | financially and get ready to pay the full amount. While it |
| after you. When you miss filing, they aren't happy. | | | | can be intimidating to have to pay up even over a few |
| They demand full payment of your past year taxes, | | | | months, the IRS is generally not a creditor you want to |
| plus fees and fines, and the whole sum accumulates | | | | have. |
| interest at an alarming clip. You might be tempted to | | | | Paying your past year taxes with another form of |
| panic, but there's a better way. | | | | debt, while not a good long-term strategy, is at least a |
| First of all, remember that the IRS only tries to scare | | | | viable stopgap. For example, if you can borrow money |
| people when they can be scared into cooperating. | | | | at less than 12% per year, you'll save on the final |
| When trying to collect on past year taxes, the IRS can | | | | amount by borrowing the money, paying the IRS, and |
| spend a lot of money following leads, investigating | | | | then paying back the loan at less than the IRS rate. |
| records, and chasing people down. Or they can | | | | The closer you get to a complicated financial |
| convince people to pay their past year taxes | | | | transaction, the more likely it is that you'll want |
| voluntarily. Usually, the latter course is a better one for | | | | professional tax and accounting help. Your past year |
| everyone involved; you get to stop worrying about the | | | | taxes started out as a simple problem (filing a form |
| huge and growing tax debt, and the IRS gets their | | | | with a single government agency, writing a check -- or, |
| money witha lot less hassle. | | | | more likely than you'd think, getting one), but has |
| What does the IRS do when you get in touch with | | | | mushroomed into something larger. Adding more layers |
| them? The first change they make is to the interest | | | | to the transaction can make your problems |
| rates you're charged. Instead of paying 1% per month, | | | | accumulate faster, too. |
| your rates go down to .25% per month. In other words, | | | | Overall, past year taxes are a solvable problem. |
| they go from more than you'd pay on a large personal | | | | They're just a problem that demands careful attention |
| loan to less than you'd pay on your mortgage. That | | | | and a little information. If you're worried about your |
| alone is a good reason to deal with your past year | | | | past year taxes, keep two things in mind: first, they |
| taxes, but the IRS offers something else, too. While | | | | compound when you don't deal with them. That |
| you're not paying, they will occasionally tack on fees | | | | interest is accumulating even when you're not paying |
| related to the delinquency. Those fees add up over | | | | attention, and those fines add up. But second, once |
| time -- until you agree to pay, at which point they stop. | | | | you do start to solve things, your situation gets simpler, |
| Agreeing to pay your past year taxes doesn't mean | | | | fast. |