Millions of Americans scrambled to get their taxes done and paid by April 15.
The majority of filers -- three out of four -- get refunds. This year the refunds were pretty large, on average $3,000.
But what if you didn't hustle to file because you couldn't pay? Or maybe you did file but couldn't pay all that you owed? One in six taxpayers owes money, according to the IRS.
Increasingly, I run into people with tax collection issues. Many are entrepreneurs. In struggling to keep their businesses running, they didn't pay estimated taxes during the year. So they end up owing the government lots of money.
Fearing the IRS will move aggressively to collect, they don't call or respond to letters from the agency. Instead, they gravitate to the voices that offer too-good-to-be true deliverance. "If you owe $10,000 or more to the IRS, call for a free tax consultation," the saviors say. "We can stop IRS liens, levies and wage garnishment."
Have faith, the tax-relief companies encourage. Through working with their team of tax experts, often claimed to be former IRS agents, they guarantee that they can help you escape most of their tax obligations, including penalties.
In the case of tax debt, you can believe if you want that there is some quick fix or a former IRS worker who knows the secret to getting tax relief. But this kind of blind faith in a debt-settlement company is likely to leave you deeper in debt and still stuck with a tax bill. Many of the companies require thousands of dollars in upfront, nonrefundable fees
In recent years, several large tax-relief companies have closed after authorities accused them of deceptive practices. Roni Deutch, who called herself the "Tax Lady," shut down her practice after California's attorney general alleged her company swindled thousands of people by taking large upfront payments while providing little or no help in lowering clients' tax bills.
The IRS offers a number of options if you owe and can't pay. You can pursue the options yourself. In just minutes, you can set up an online payment agreement for up to 72 months if you owe $50,000 or less in combined tax, penalties and interest. Go to www.irs.gov and search for "Online Payment Agreement Application."
"We work with people all the time to get them back in the system," said IRS spokesman Eric Smith. "Chances are you don't need to pay somebody. You may be able to do a lot of work on your own. When you see the ads for people saying they can solve your tax debt for pennies on the dollar, many of those kinds of operations are not providing good service to people."
If you have tax debt, stop hoping for a savior and contact the IRS.
Hispanic #1 Breaking News for Entrepreneurs, Professionals and Small Business Owners - HispanicBusiness.com
OCTOBER 31, 2014
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