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BUSINESS BASICS CHANNELS 
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I Owe, I Owe. Oh No! Well, tax time is here again. And you have your tax returns all done. And it isn’t pretty. You owe the IRS money. More than you have. So now what? There are a few ways to approach the situation when you owe the IRS and you just don’t have it. Here are some helpful hints to solve this problem. First, relax. I don’t know of anyone who has gone to prison for not paying their taxes. Yes, they go to prison for not filing or filing fraudulent returns, but not for owing taxes. So the first order of business is to make sure you owe the LEAST possible tax liability. If you aren’t sure you prepared your return correctly, or if you have taken all available deductions, then get help. Have a tax professional look over your return. Many will do this at no charge. Next, once you have determined the amount of tax you owe, find ways to raise cash. Borrowing from a friend or family member is probably the cheapest and easiest way, if you have someone who has enough to loan you money and is willing to take a chance on you. Credit cards are another way to pay taxes. Either by charging the tax bill directly or taking a cash advance to pay off Uncle Sam. Some people want to pay their taxes on their credit cards just to take advantage of the miles they will get for charging. Selling assets, getting another job, robbing a bank (no, scratch that last one--- you CAN go to jail for that and they are very efficient at catching you) are all possibilities. Okay, so Mom and Dad say NO to your latest loan request, the banker laughed at you, and you have nothing of value to sell. Now what? Good news here. If you owe less than $ 10,000, you can set up an automatic installment agreement with the IRS. All it takes is a phone call. They will usually work something out to help you pay off your debt over about 3 years. Keep in mind that they are charging you penalty and interest the whole time, so it is to your benefit to pay them as quickly as possible. If you owe more than $ 10,000, do not abandon hope. You can probably work out an installment agreement too, but be prepared to give the IRS every piece of information about yourself you can think of. Every assets and liability, every monthly payment, where you work, where you bank, who your relatives are, etc. Form 433-A asks more questions than Regis Philbin and you won’t end up being a millionaire. So you say, “I didn’t know anything about these taxes. My husband/wife takes care of all that and I just signed where I was told.” This happens more frequently than we would all like to believe. IRS resources are being poured into innocent spouse programs. Under this program, you may be relieved of all or part of your tax liability if you can prove you were innocent and didn’t benefit in anyway. Then there is the big gun to use when you owe the IRS and can’t pay: The Offer in Compromise. If there is a doubt as to whether the IRS is dunning you the right amount or if there is doubt that you will ever pay off what you owe, or if paying would create economic hardship, then this baby’s for you. Again, be prepared to bare your soul to the IRS, but if it works, you may get incredible relief. I have seen people offer incredibly small amounts to settle big debts. This can be good for both you and the IRS. You get Uncle Sam off your back, and Uncle gets a chunk of money from you and can focus on chasing down someone else. Here is how it works. You determine how much you owe and why you can’t or won’t pay. Assuming you just can’t pay, you fill out the Offer in Compromise Form. You list all your assets, who you owe, your income and expenses. The form works you to a number that is the minimum offer. Then you borrow it or have a gift made to you or agree to make payments. Example: you owe $ 25,000 but your debts exceed your assets and your income doesn’t cover all your expenses. But Mom and Dad will give you $ 1000 to help you one last time. You send in the Offer form, with that pesky 433-A and offer to give IRS $ 1,000 if they will let you off the hook. Then you wait and wait and wait. It took one of my clients over a month just to get IRS to even admit they had RECEIVED his offer. Expect to have the whole thing take a year. Once they get your form, and assign it to someone, the IRS agent will contact you and investigate your true situation. If things are as you told them, and they accept your offer, you pony up the money and VOILA! your tax debts go away. BUT, be aware that you agree to file all returns on time and PAY on time for five years. If you screw up, kiss the offer goodbye and expect to get reacquainted with your friendly revenue officer. One last tip: Many people don’t file their tax returns at all when they owe money. This is the worst possible thing to do. The penalty for failure to file starts at 5% per month to a maximum of 25% and penalty for failure to pay and interest keep building. Not filing is expensive and only delays the inevitable. DON’T DO IT! Not filing or just plain ignoring the IRS will get you nothing but trouble. Even if they levy your bank account or garnish your wages, there is hope. I would be amiss here if I didn’t put a plug for your friendly professional tax preparer or CPA. These people know the ins and outs of the tax system and can help you through this tough time. Seek out help if you find yourself over your heads. Well, that’s it for now. Happy Tax Season and good luck if you owe the IRS.
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