4 Easy Steps to Resolving Your Tax Problems

by in Tax Issues

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After years of struggling, you suddenly break through all the barriers – and cash starts flowing in. What’s the first thing you do? You pay off all your debts. The second? You buy the toys you’ve always wanted.

Then, when it comes time to pay the IRS and your state, there’s no money left. But, uh oh! There’s a huge tax bill on those big affiliate commissions. This problem often crops up with Internet marketers and affiliates who suddenly ‘get it’ and start generating hefty commissions. (Shhh, I won’t tell anyone. But it happens to practically everyone in the first two years…until you learn to manage your money.)

Meanwhile, let me outline a few things you can do when you owe IRS (or your state) much more than you can afford to pay.

1)    COMMUNICATE! Do not ignore the notices. They won’t go away. You must contact IRS (or state) and let them know you want to work out a way to deal with the balance due.

2)    Determine how long it will realistically take you to pay off the balance.

    • If you think you can pay it off in 2 or 3 months, just call IRS and ask them to put a “collections hold” on your account – and send in a payment after you get off the phone. Pay the whole amount off when you promised you would.
    • If you think you can pay it all off in about 2 or 3 years – you can get an installment agreement. In fact, you can even do it online and have the IRS accept it if you owe $50,000 or less. Follow the instructions on this page.

3)    Suppose you owe so much that you will never be able to pay it off and still keep paying taxes on your current income? You can request an offer in compromise (OIC).  Yes, that’s the ‘pennies on the dollar’ deal you see advertised on TV and radio.

    • You can hire someone and pay about $3,000 – $5,000 to handle the offer for you. (Note: You will be doing most of the work, anyway, gathering the information.)
    • You can do it yourself, using the IRS Form 656 package – which includes instructions.

i.     You’ll find all the information you need – be sure to READ IT ALL!

ii.    If you need professional guidance, take a self-study course or two on how to do it properly. These courses cost only $39 each and provide insider tips to get your offer accepted. (The courses are designed for tax pros – but you will be able to understand them.)

4)  Or…do it yourself, but pay an Enrolled Agent or CPA for two hours of consultation time to review your application before sending it in. Make sure they have extensive experience with OICs – or find someone who does.

With all the solutions and options currently available, there’s never a need to lose sleep over tax problems. It may not be the most fun or pleasant thing to deal with. And it may take a year or two to resolve.

But you got yourself into trouble – so tackle the problem head-on. You’ll feel so good about yourself when you do!

 

 

About the Author - Eva Rosenberg

Eva Rosenberg, EA, founder of the popular tax advice site, www.TaxMama.com, is a nationally syndicated Dow Jones columnist at MarketWatch.com, an author and popular speaker and instructor. Please join the TaxMama family and get answers to your own tax questions.

 

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