Discussion:Best way to pay tax liability
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| 5 April 2007 | |
| Hi guys-
Time for my nightly midnight question. Client owes a substantial balance to IRS. He doesn't have it all to pay by 4/17, but will liquidate an investment and should have balance by month end. I'm not sure of the best advice to give him. Pay what he can with 4/17 filing and then pay balance when cash comes in. Or should he set up an installment agreement? He will probably have the money before the IRS even sends him his first bill via Installment. I know he will pay a set up fee for 9465. TIA | |
| 5 April 2007 | |
| How much time and energy and analysis to figure the costs of the various scenarios, selling an investment that might be a potential windfall vs installment agreements. I usually tell my clients what they owe, what the interest and penalties will be (energy and analysis) give them some options and let them decide. They usually know they owe when they give me their tax info.
I usually tell my clients to pay as they can, esp. if they can pay before the IRS notices, then no need for installment agreement? Nap time.. | |
| 5 April 2007 | |
| Get a loan or cash advance on credit card. Those fees are less than being late with Uncle Fed. | |
| 5 April 2007 | |
| DZ....I suggested that already. Client said it wasn't an option.
Marcy | |
Death&Taxes (talk|edits) said: | 5 April 2007 |
| File an extension showing the liability; send what he has with the form and file the return when he has the money in hand. IRS lends at 14% per annum now. Halfpercent a month late payment penalty plus 8% interest per annum. It cost $43 or more just to set up an installment agreement. Only do that if there is no possibility of him obtaining the balance due by 10/15/07. | |
| 5 April 2007 | |
| D&T..
forgive my ignorance...but what does filing an extension with a partial payment get client that filing the completed return with a partial payment doesn't? Thanks. Marcy | |
| 5 April 2007 | |
| D&T; installment fees went up this year to $105, or $52 if electronic funds w/d. | |
| 5 April 2007 | |
| Can anyone shed light on my question "but what does filing an extension with a partial payment get client that filing the completed return with a partial payment doesn't?"
I'm really thinking the installment plan is not his best option.... | |
| 5 April 2007 | |
| It will defer the IRS notices until the return is actually filed - If you send in the return now -the IRS knows to send her a "you owe us" notice... it's a good idea if your client gets freaked out by IRS correspondence.
If you file the extension it's not going to waive or eliminate the penalties or interest that will accrue until the tax is paid. If you decide to file the extension...be sure to calculate the interest and penalties for the late payment on the return itself(you'll be able to do that if you file the return after she's realized her assets)...She's going to have to pay the tax,penalties, and interest no matter which way you do it. | |
| 5 April 2007 | |
| Thanks Vb....okay, that makes sense. I didn't think it would make a difference with penalty and interest, wasn't sure if I was missing something.
Not getting a letter can be a good thing :-) Marcy | |
| 5 April 2007 | |
| Actually it's not getting that phone call from the client after the client gets the IRS letter that's a good thing!!! :) | |
| 5 April 2007 | |
| Vb...very true.
Pegoo.....I'll suggest your method as well. Don't you think pennies would be better? Or how about the new dollar coins that are coming out (yet again!) thanks to all. Marcy | |
Death&Taxes (talk|edits) said: | 5 April 2007 |
| $43 sounded too cheap, and I read that a week or so ago, but the brain did not connect. That $105 equals one month interest and penalty on approximately $6300 of tax balance due. | |
| 5 April 2007 | |
| IRS Tax Tips newletter just issued today lists various payment options. 1) Pay by credit card American Express, MasterCard, Visa or Discover. To pay by credit card client contacts one of the service providers @www.pay1040.com 2) Request an extension of Time to Pay - requesting an extension from 30 - 120 days - they will pay less in penalties and interest than if the debt was set up as an installment. And lastly, the installment agreement. The IRS lists some websites: www.officialpayments.com, www.pay1040.com | |
| 9 April 2007 | |
| My client needs to file form 9465 for $30M tax liability. She wants to make an appointment with local IRS office to tell them "her story". I think it will be a waste of time because the 9465 goes with the return with a determination made at the Kansas City office. Am I right or can local office have any impact on the filing? Another part to this question is her gambling. If she is not able to pay her taxes and is requesting installment agreement, will her continued gambling jeopardize the agreement? Her losses far exceed her winnings. | |
