Millions of people across Texas and the rest of the United States face a serious problem every year; they are ordered to pay income taxes that they cannot afford. It is common for a citizen to owe more than they can afford or even more than they possess, particularly given the lingering effects of the economic downturn, but there are a number of ways to address such a problem.
It is important to remember that ignoring the issue is not a good solution, as the IRS has the ability to place a bank or wage levy on, or seize, property from those who do not take steps to pay off their tax balances. Texas residents who are struggling with unaffordable taxes and at a loss concerning their next step may wish to consult with a qualified attorney specializing in tax law for personalized advice.
Even individuals who cannot afford to pay their taxes should file a tax return with the IRS. Late tax payments carry monthly fees and daily-compounding interest rates, but failing to file a return makes these penalties even more severe. A Texas resident who has neither filed a return nor paid taxes faces additional penalties, increasing 5 percent each month to a maximum of 25 percent.
Citizens who fail to pay their taxes receive several notices from the IRS, each of which can result in harsh repercussions if the tax agency does not receive a response. Many tax experts recommend returning each letter with a portion of one’s balance if possible. The IRS is not required to accept these payments in lieu of the full amount, but such a tactic demonstrates one’s good faith and can help delay levies or seizures. One can even negotiate a formal installation-based payment plan by sending an Installation Agreement Request, Form 9465, to the IRS Service Center.
Those who repeatedly ignore IRS notices will eventually begin receiving calls from its Automated Collection System at home and in the workplace. Individuals who still fail to pay will likely hear from a revenue officer in person, who may determine that seizing property or garnishing wages is the best way to resolve the situation.
Trib.com, “TYSON: When you can’t pay your taxes” Eric Tyson, Jul. 13, 2013