Filed Your Tax Return, But Didn't Pay? The IRS Is Starting to Send Notices
Did you file your tax return on time but couldn't afford to pay the balance due? You're not alone.
Every year, many taxpayers file their returns by the deadline but don't have enough cash available to pay the tax they owe. Filing on time is important because it avoids the much larger failure-to-file penalty, but it does not stop the IRS from beginning its collection process.
Now that tax season has passed, the IRS is starting to send notices to taxpayers with unpaid balances.
What Happens If You Filed but Didn't Pay?
After processing your return, the IRS will send a notice showing:
• The amount of tax due
• Penalties that have been assessed
• Interest that has accrued
• The total amount currently owed
Even if you cannot pay the full balance, it's important not to ignore these notices. Interest and penalties continue to accumulate until the debt is paid in full.
The Good News: You Have Options
Installment Agreements
Many taxpayers can make monthly payments over time. The IRS will usually accept a plan that will pay off the tax debt in no more than 60 months. Setting up a payment plan can help avoid more serious collection activity. Most of the time, taxpayers can set up an installment agreement online.
Temporary Collection Relief
If paying the IRS would create a significant financial hardship, the IRS may temporarily delay collection efforts. Read our article about Offers in Compromise.
Penalty Relief
In some situations, penalties may be reduced or removed through programs such as First-Time Penalty Abatement or reasonable cause relief. Do not pay any penalties without checking first to see if they can be removed.
Don't Wait Until the Problem Gets Bigger
Many people make the mistake of setting IRS notices aside because they are uncomfortable dealing with the situation. Unfortunately, penalties and interest continue to grow, and additional notices become more serious over time.
The earlier you address an unpaid tax balance, the more options are usually available.
Need Help?
If you filed your tax return but still owe money to the IRS, don't panic—but don't ignore the notices either.
GurelCPA can help you understand your options, evaluate payment arrangements, and communicate with the IRS when necessary. Please contact me directly for a free consultation.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.