Each year, tax filings can change. For some, it stays fairly set, as not much changes from year to year. However, if something has changed with real property ownership or there was a gambling win, changes in taxes due will likely occur. And because life changes can increase the amount owed, life changes can also impact one’s ability to pay these taxes as well.
If an individual in New York and elsewhere does not pay their taxes in full when his or her tax return is filed, a bill for the amount still owed will be issued. Receiving this bill initiate the tax collection process. This process continues until the account is satisfied or until it is determined that the IRS can no longer legally collect the tax. It is possible for the period of tax collection to expire, and when it does, the IRS can no longer seek collection.
The first notice, which is the initial bill sent, not only outlines the amount owed but also details any penalties for nonpayment of that amount and any interest accrued from the date it was due. The unpaid balance is subject to interest, which is compounded daily. A monthly late payment penalty is also added. If a taxpayer in unable to pay their balance in full immediately, it may be possible to work with the IRS and develop a monthly installment plan. If that is not doable, one could also seek a partial payment installment agreement.
Seeking an agreement or a compromise with the IRS may seem challenging and many may not understand how best to move forward with such a process. Thus, it is advisable to seek guidance on this topic. This not only helps you get better informed, but it also establishes your rights and options in this matter.