When it comes to filing your 2025 tax return, the hope is that you accurately accounted for your income by having the right amount of taxes withheld or by making adequate estimated tax payments. If that has occurred, you should either receive a tax refund or owe little to no money to the IRS. For whatever reason, the result of your tax filing may be that you owe more to the government than you can afford to pay. The good news is that you may have options that can either allow you more time to pay or even negotiate to reduce the amount of money that you owe to the IRS.
Discuss your options with a New York tax attorney at Thorgood Law Firm today.
File All of Your Tax Returns
The most important thing is that you accurately file your tax return before the April 15 deadline because that will give you more leeway to work with the IRS to address your situation. You cannot even begin to seek a solution to any tax issues unless you are current on all of your tax returns. The IRS will not negotiate with you or reach any accommodation until you have filed tax returns for all years that are due.
Do Not Borrow Money to Pay Your Taxes
The one thing that you should absolutely not do is to seek any type of external credit to pay the money you owe, such as a personal loan or putting money on your credit card. Given the options that the IRS may make available to you, it would be extremely financially unwise, and you can end up costing yourself a considerable amount of money.
Installment Agreements with the IRS
The most effective way to get more breathing room on your taxes is from the IRS itself. Under Section 6159 of the Internal Revenue Code, the IRS may allow you to pay your taxes based on an installment agreement that you may reach with the agency. The IRS is not obligated to agree to an installment plan, but the agency has its own goals and interests in the tax process. The IRS wants to collect as much tax as possible without having to take more drastic enforcement measures, so it may allow you additional leeway to pay the balance of your taxes. The IRS has its own internal rules that strongly favor requests for installment agreements, provided that you meet certain criteria.
You have a greater chance of receiving approval for an installment agreement if the amount that you owe is less than $50,000. The IRS will also review your financial situation to determine whether you have the ability to eventually pay your debt by looking at your income and assets. If you have proposed a reasonable plan, there is a chance that the IRS may approve it, giving you more time to pay. However, the IRS will not approve any request for an installment agreement if you are not current on your tax returns.
If you do enter into an installment plan, the money that you owe for back taxes, penalties, and interest still remains. Further, your balance continues to accrue interest until you pay off the amount that you owe. Accordingly, reaching an installment agreement gives you more breathing room, but it does not eliminate your tax debt. An experienced tax lawyer can assist you in obtaining a fair installment plan.
Make an Offer in Compromise to the IRS
An Offer in Compromise (“OIC”) is one of the most critical aspects of tax regulations that can help you in a difficult situation. While an installment agreement gives you more time to pay the money that you owe, an OIC can actually reduce your tax balance. The result could be that you have a more manageable tax balance that you can afford to pay. Like an installment agreement, you must be current on your tax returns filing to make an OIC.
The IRS does want to collect as much tax as possible, and it may be willing to forgo some of the tax balance to collect a portion of what you owe. The agency recognizes that it may be more feasible to try to collect a lesser amount because it will receive something on behalf of the government. The best move is to have a tax lawyer negotiating a possible OIC for you.
The most common ground for the IRS accepting an OIC is doubt as to whether the agency can collect. Again, the IRS will review your financial situation and determine whether it thinks that you can pay what you owe. If it does not appear that you have the assets or income to pay your tax debt, the agency may be more likely to accept your offer.
You may also make an OIC when there is doubt about your actual liability. If you and the IRS are in dispute about whether you actually owe the taxes, the agency may be more willing to reach some type of a settlement agreement.
Request Penalty Abatement
Some of your back taxes may come from the fact that the IRS has assessed certain penalties for underpayment of your taxes. Penalties can increase the amount that you owe to the government. Under certain limited circumstances, the IRS may waive these penalties upon request. For example, the IRS may waive a penalty if the circumstances that led to a penalty are excusable for reasonable cause. They could also allow penalty abatement if it was the first time that the agency assessed a penalty.
Contact a New York Tax Lawyer
As you can see, you are not powerless when it comes to back taxes you owe. Although much may be at the discretion of the IRS, you need an experienced tax attorney who knows how to deal with and speak to the agency. You can schedule a free initial consultation with a New York tax attorney at Thorgood Law Firm by filling out an online contact form or by calling us today at (212) 490-0704.
