What does compliance mean?
It could mean the difference between smooth tax resolution or forced collections.
Smooth Tax Resolution:
Compliance means filing your tax returns on time and timely paying if you owe and filing any missing returns not yet filed. Remember, filing an extension to file your tax returns is just that. The extension does not extend the time to pay, only the time to file the returns. Many people still do, but compliance means making your tax payment by the April 15th deadline.
Don’t know how much you’re going to owe? Make a payment based upon an estimate of how much you owed last year. The penalty/interest is based upon the amount you owe; if you make a payment, the balance not paid is the amount the IRS will tack on penalties and interest on. This can significantly reduce penalties and interest by just making a payment by April 15th.
In addition, if you are self-employed, compliance means to make your estimated tax payments each quarter and on time. Without being in compliance, the IRS is less likely to work with you on resolving back tax matters. If you are not in compliance, an Offer in Compromise will be returned until you are in compliance.
When a taxpayer ignores the compliance issue and does nothing to resolve the tax matter, IRS will have no alternative but to force collections.
Forced Collections:
When taxpayers owe taxes, IRS will send various letters trying to collect on the past due balance. Collections could mean 25% of your w-2 or 1099 wages, 15% of your social security income, bank levy, and seizure of tax refunds including state refunds. These funds are applied to the earliest tax period you owe.
Collections is never a positive way to resolve back taxes. Dealing with the IRS directly to resolve back taxes gives you control. If you just can’t deal with the matter, call us and we will. It’s what we do.
