In this article you will discover more about:
- Why taxpayers and businesses end up missing tax payments to the IRS,
- How unpaid taxes can accumulate and snowball dangerously if not reported or dealt with, and
- The advantages a strong tax attorney can give you when dealing with the IRS and back taxes.
What Are Estimated Taxes And Why Do Taxpayers Commonly Fail To Pay Them?
Estimated taxes are most often owed by people who own a business or earn income from which no taxes are automatically withheld. This can include income sources such as…
- self-employment income,
- capital gains,
- and more.
The main reason people do not pay their estimated taxes is that they simply do not realize they are supposed to. A responsible tax preparer should remind them of it each year, figure out whether or not they should pay, and should give them slips with which to pay.
The other frequently occurring reason is that when their business profits greatly increase during the year, a businessperson might not realize they should pay estimated taxes or increase their estimated taxes.
How Often Does A Taxpayer’s Failure To Make Quarterly Tax Payments End Up Snowballing?
Unfortunately, snowball effects are all too common when taxpayers fail to make the necessary quarterly payments.
Much of the time this happens simply because they are not correctly informed or educated by their tax preparer and do not realize they are supposed to pay estimated taxes until contacted by the IRS. Since this could take years, the arrearage and interest can accumulate into an avalanche which can bury an unprepared business.
Is It A Big Deal If I Miss One Or Two Quarterly Estimated Tax Payments To The IRS?
Missing quarterly payments is always a problem, one which will only get worse. First, you will be charged penalties for underpaying your taxes. Furthermore, since these penalties will most likely be calculated directly on your tax return, your taxes will be higher than they would otherwise be.
Therefore, missing even one of them is potentially a very big deal indeed. While doing so can have serious consequences, the problems are easy enough to remedy if you act fast with the help of a seasoned tax attorney.
Should I Still File My Taxes If I Missed Every Required Estimated Tax Payment Last Year?
You should file even if you have missed some or all of your estimated tax payments. You should also pay what you can, even if you cannot pay the whole bill.
Doing so has two key advantages:
- You will avoid non-filing penalties.
- You can avoid what can end up being quite consequential interest if you pay at least part of what is due.
All too often, however, taxpayers forget a few payments, then decide not to file, hoping it will all go away. Like an ostrich sticking its head in the sand; however, this never works out in their favor.
What Are The Dangers For Taxpayers Who Avoid Paying Their Taxes After Missing Their Estimated Quarter Lease?
It is a scene repeated in too many businesses and homes each year. Someone receives their returns and realizes they have not paid what they should. Now they owe a lot of money, but they stick their head in the sand and hope it will go away.
Inevitably, however, they will be hit with liens and even levies against their account, interest will be enforced and penalties will continue to accrue. What started as a small inconvenient payment ends up becoming an insurmountable threat.
If I Know I Cannot Pay Everything, Is It Better To File Taxes And Owe Or Not File At All?
It is always better to file your taxes and pay what you can.
By doing so, you avoid significant non-filing and late filing penalties. Even if you can’t pay everything, you can pay what you can and a good tax attorney can set up an installment agreement to help you pay that off with minimal build-up or snowball effect.
What Are The Advantages Of Consulting A Tax Attorney When Filing Years Of Back Taxes?
Filing taxes can be intimidating and doing so after years of missed or partial payments can be downright terrifying, not to mention confusing, it is not something you should try to do alone. There are several advantages to hiring a qualified tax attorney when filing after years of failing to do so, and there are dangers to trying to do so on your own.
While you can and should file them all at the same time, a tax attorney can help you prepare them all and file them correctly. There are even special ways to do so, which will allow your tax attorney to file for the best, or least detrimental, outcome for you and your business.
I Owe The IRS Back Taxes. How Soon Before They Start Garnishing My Bank Accounts?
There is no definite time period after which the IRS comes calling, unfortunately. The IRS could come after you sooner or later depending on numerous factors, often outside your control. After COVID, the IRS has gotten somewhat behind, so while it could be a matter of months it might even take them three or four years.
However, once you are on the IRS radar, you will quickly receive a series of five or six letters telling you to pay. Your last letter will be certified and will warn you that, within 30 days, they will start levying your bank accounts and/or wages if you do not contact them. That is when you must contact the IRS.
When Should I Contact A Tax Attorney?
You should certainly try to contact a strong tax attorney well before the IRS starts sending threatening letters. However, if you have not done so, then it is still not too late to do so, as an experienced and competent tax attorney will still be able to help you.
Nevertheless, the earlier you do so, the more they will be able to help you navigate the dangers of estimated taxes and IRS debts.
With the guidance of a skilled Tax Attorney, you and your business will be stronger, safer, and more profitable. For more information on Tax Filing in South Carolina, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (864) 271-7940 today.