YES, it is extremely important that you file a tax return on time to avoid having penalties assessed against you. If you cannot afford to pay the IRS in one lump sum, pay as much as you can with the return. By filing your tax return on time you avoid having a late filing penalty fee assessed by the IRS. In addition, you will be able to reduce the amount of interest assessed when you pay as much as you can afford when filing your tax return.
If you cannot afford to pay the full amount due, it is best to try to setup a payment agreement with the IRS by completing IRS Form 9465-FS and sending it to the IRS with your tax return. This will let the IRS know that you are interested in paying your remaining tax liabilities through installments payments. However, if you are unable to afford to pay the IRS via installment payments, contact one of our Bond & Botes offices today to setup a FREE consultation discuss all of your options.
Filing a chapter 13 would allow you to pay the liability over a five year period and filing chapter 7 may be able to discharge older tax debts if certain criteria are met. For example, if you have assessed tax liabilities for multiple years and have filed your tax returns on time, the bankruptcy code may allow for some of those tax liabilities to be discharged. Therefore, it is extremely important to timely file your tax returns.
To learn more about what impact a bankruptcy filing could have on your back taxes, click here. If you wish to discuss your tax liabilities further, contact one of our local Bond & Botes offices today, to setup your free consultation with an experienced attorney.