When it comes to taxes, people would like to believe that there are a lot more gray areas than there actually are. For example, some people would like to believe that taxes themselves are a gray area, that is, more of a suggestion than a real obligation. Sorry to burst your bubble, but taxes are not optional, but mandatory, and if not promptly taken care of could result in some very crippling results, one of which is jail time.
To complete your taxes, you have to not only file state and federal, but you also have to pay whatever refunds that come out at the very end of your filing. If you are lucky, you may receive some money back as a result of your filing, but if you do not qualify for a return, then you must pay back what you owe. This is where people get turned around when it comes to their taxes, as the question appears as a result of the large bill they just received: “Do I really have to pay back my taxes?”
The short answer is yes, yes you do. Read on for why it’s a much better idea to work to pay your bill rather than try to dodge it. You’ll be glad that you do.
You more than likely will not get away with it.
For those thinking that they can get away with skirting by while not paying any taxes, or that the IRS (Internal Revenue Service) is only after the rich, think again. The IRS is after people who aren’t willing to play ball when it comes to giving the government what is rightfully theirs. Freedom isn’t free (which sounds contradictory, we know), and taxes are how we as a country can afford to keep our figurative lights on.
The IRS is not an agency that is to be feared only by tax evaders and dodgers who are rich, but by people of all financial classes who are trying to get around paying up, and they will find you. Like how Liam Neeson searches for his family all over the world after they get kidnapped (You’ve seen those movies, right?), IRS agents possess a very special skillset that equips them to find perpetrators wherever they think they might be safe from the agency’s reach. If you follow the rules (that are not hard to keep to by any means) and file and pay your owed taxes, then you haven’t anything to worry about.
If you however try to cook your books (alter documentation to cover up your having pay your full due of taxes), then you can expect IRS agents to show up either at your home or even at your office to ask you some questions that could eventually lead to a lengthy and expensive trial. All of this anxiety and trouble is not worth the risk that follows not filing or paying, so do yourself a favor and pay your dues, and pay them as soon as possible. Read on for why you should pay them ASAP.
Interest, tax payments, and you.
Contrary to what you may have thought, your taxes work like a really bad and very painful credit card debt, minus the fact that you got to buy something before you revived a debt. Your owed tax debt accrues interest the longer you leave it unattended and unpaid, and it grows a lot faster than that of a credit card. You can use this calculator to get an idea of how much you will have to pay if you are late in your taxes.
Unless you want to have a sizable government debt that rivals that of a small nation, pay your due taxes as soon as you can to avoid the compounding that will soon follow a formal bill being sent to your doorstep. People forget sometimes, and that is okay, but be sure to get on it as soon as possible. Better late than never.
What to do if you can’t pay your tax bill right away.
If you cannot pay the lump sum that is due and expected by the federal government right away, but fully intend to, then know that there are multiple ways that you can legally handle it. There are options that are government approved to help you with your tax debt, all of which you should note does NOT include ignoring your debt. What you can do is:
Formally ask for a delay.
If you currently do not possess the money needed to pay off your due taxes, then you can file an appeal for an extension, all the while without incurring a heavy accruement of interest. Call your and get in touch with your local IRS office to find out more details on how you can work out this handy feature.
Pay in installments.
That’s right, although the IRS comes off as the adult version of the Boogieman, this government agency is not made up of monsters. They want what belongs to them and the federal government, but they also understand that it is a pretty tall order for some people to cough up steep piles of money on command.
Get in touch with your IRS office to get more details on setting up a payment installment plan, or log on here to get on it and start reducing that tax debt of yours now.
NOTE: They do take major credit cards as well as cash and check, so if your credit limit is upstanding enough to take on your tax debt and get the IRS off your back, it might be a wise idea to consider moving it onto the plastic.
File Form 656 A.K.A. an “Offer in Compromise”.
For those who qualify, you can propose to work out a deal with the IRS to pay what you can on your owed tax debt and be forgiven of the rest. The perks of this option is that if you can prove that you cannot legitimately pay off all of your owed debt but can pay most of it, and also have an upstanding history of paying and filing your previous taxes, then you can get away with not paying your full taxes but still having your record be untarnished as a tax evader or tax fraud-er.
Know that Form 656 works like a sweepstakes does though: many will enter, few will win. So just because you pay to submit an application, it does not mean that your application will be received with a confirmation to go through.
Pay your taxes people. Unless the idea of being chased down by government agents (in extreme cases) sounds fun, you should make it a point to both file your taxes and pay your owed refund if applicable. If you do not pay up, then you risk significant charges alongside your initial tax sum, which includes multi-thousand dollar fines and jail time.
Be a responsible grown up and pay your taxes. It’s the law to do so, not a suggestion.