Dealing With Past Due Taxes ? A Matter Of Perspective

Dealing With Past Due Taxes ? A Matter Of Perspective

Federal, state, county and local governments all run off of the taxes we pay. As you probably have noticed, they get a bit touchy when you don’t pay the amount you owe or do it on time. If you owe past taxes, you are going to have to deal with the problem sooner or later. How you do it is a matter of perspective.

Every single tax agency is a massive government machine that grinds along day after day after day. Practically speaking, this means the agencies are generally very slow to react. Once they do, however, the collection effort can be hard to stop and you can easily get trampled into the ground under the assault of agents and audits.

If you don’t pay your taxes this April, the IRS is not going to be knocking on your door the next day. In fact, the agency probably isn’t going to do much of anything other than send out computer generated correspondence if even that. I will give you a classic example. My accountant filed my personal return for 2005 electronically. The IRS did not get it. It wasn’t until 2007 that I heard about it. Yes, a full two years.

While it took a bit, the agency did track me down and it was not pleased. The first notices were for tens of thousands of dollars and I nearly fainted. After much discussion and copies of tax returns, the agents finally realized I was not trying to play funny with the money as they say. I ended up paying some penalties and interest and that was it. It was an extremely stressful time and the only thing that really saved me was I had paid the original taxes on time.

This example should give you a clue on how important perspective is in these matters. If the IRS starts hunting for you, fending the agency off is going to be difficult, stressful and expensive. If you voluntarily come forward and try to deal with the issue, the agency is much more willing to work out arrangements with you. You don’t have to live with past due taxes hanging over your head.

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