Whether you are an incorporated business owner or a self-employed individual, you likely work to avoid any and all IRS issues as you manage your ongoing tax-payment responsibilities. Tax mistakes with the IRS can result in countless costly scenarios, including fees and penalties, and in extreme cases, jail time. Dodging troubles with taxes requires constant, attentive maintenance, however. Being proactive in your approach to filing and paying correctly is often your best bet, especially when your finances—and maybe even your reputation—are at stake.
Using Installment Agreements as a Preventative Measure
An installment agreement is something offered to us by the IRS when we are unable to pay the entire lump sum we owe immediately. It is a helpful tool that allows us to pay the balance in pieces, over time, while still upholding our tax obligation. It may not be available to everyone, and certain requirements do apply; however, an installment agreement can be a nice option to take advantage of when you are at risk of being fined for failing to pay your balance correctly or on time.
While installment agreements do accumulate interest charges the longer you take to pay them off, they are still a good preventative measure for avoiding even greater fines that can result from neglecting to pay all together. Most businesses that owe less than $25,000 in payroll, and individuals who owe $50,000 or less in combined individual income tax, penalties, and interest, are usually eligible for an installment agreement.
Avoiding Mistakes with Your Agreement
Your agreement is a contract with the IRS and needs to be taken seriously in order to avoid default. Prevent any issues from arising by doing the following:
1. Ensure All Information is Up to Date – In order to avoid default, it is imperative to make sure the IRS can get a hold of you. This means you should have the correct name and address on file with them at all times. Also be sure to confirm your payment amount and due date to keep yourself on track. Additionally, make sure your return is filed on time and that all relevant contact information attached to it is correct.
2. Pay the Minimum – Just like a personal line of credit or loan, paying the minimum on the due date each month will help keep you from incurring additional interest and fines. The same applies to your IRS installment agreement; pay at least the minimum due, plus any additional amount of your choosing if you would like to reduce interest and pay off the plan sooner.
3. Contact the IRS to Make Any Changes – Communication is everything when it comes to maintaining good financial standing with the IRS. Any changes to your agreement need to be documented. Whether you simply need to update your contact information or are having difficulty making an upcoming payment, do not put off contacting the IRS about your question, concern, or contract modification. Certain requests for changes may even be done on-line, through the Internal Revenue Service website.
Staying on top of tax payments can be tough, especially when your balance turns out to be larger than estimated. If you feel yourself sinking into trouble, contact a skilled Cook County IRS issues lawyer right away to tackle your IRS debt and avoid further damage. Call the Law Offices of Eric G. Zelazny today at 708-888-2299 for a special consultation.