Every year people all over the United States face April 15th with too little money to pay their debt to the IRS. The first step is to tell the government about your delimma. People who just hope for a miracle lose their bank account, their car, their house, and their dignity.
In all but the most extreme cases, the IRS will work with you to help you get those pesky taxes paid. Like any bill collector, they want their money. However, they would rather work out a payment arrangement with you than go after your assets.
Either file your taxes on time, or file for an extension by tax day.
The IRS will give you an extension on filing your 1040 if you just ask. Getting an extension is not the same as getting to delay paying your taxes. Ironically, the government expects you to send them your check on time even if your full return may not reach them until September.
Filing your 1040 or requesting an extension by tax day looks good to IRS agents who will be negotiating with you for your delinquent taxes. It tells them that you are trying to be responsible even if you are short on cash.
Be patient with the phones while trying to speak with someone about your problem.
Remember that you and thousands of other people are asking for a payment plan at about the same time. Along with this, hundreds of thousands of questions are being asked via telephone as tax day approaches. All of this activity can make for some long waiting periods on the phone. You may want to try calling a various times during the day.
An alternative to calling is to write the IRS and explain your situation. It will take several weeks, but they will respond. At that time, you may be asked to call for an interview or to schedule and appointment to come to the IRS offices. More than likely, you will be given a phone number that is less crowded. If you are really lucky, they will call you.
Organize your tax materials so that you will be able to answer any questions easily.
It is unlikely that they will want to audit your return, but they could have some questions about your income and why you did not pay enough taxes through an employer or quarterly tax payments. Having your paperwork within easy reach and organized will make this process smoother and quicker. What you want to be sure to substantiate is that you are not trying to be a tax cheat.
Know what type of financial resources are available before beginning to negotiate.
Do not promise to pay large amounts that are beyond your financial capacity. It is better to make smaller payments faithfully than consistently miss making large ones. It may cost you a little more in interest, but you will sleep better at night knowing that the IRS wolves are not getting ready to huff and puff and blow your house down.
If your IRS debt is large, you may need to find a tax attorney to negotiate for you.
Around tax time, lawyers that specialize in bargaining with the IRS to reduce taxes owed start advertising heavily on various forms of media. Find one of these lawyers to represent you if your IRS debt far exceeds your ability to ever pay it. Often, these professionals can get your taxes reduced by more than 50%. Along with this, they may be able to get penalties and interest waived. Use this as a last resort, but do not be afraid to go this route.