What If You Owe Taxes? Or Didn't File?
The dreaded April 18 tax deadline has passed. If you’re one of the millions who didn’t file your taxes because you didn’t have the money to pay, that’s not a good idea.
When you don’t file your taxes on time, an automatic 5% penalty is added every month, up to 25% maximum. That penalty begins accruing the day after (April 19) the tax filing due date.
You could have (and still can) file a 6-month extension to file your return. If you filed this extension before the tax deadline, you won’t receive that 5% penalty. However, if you do owe taxes and filed an extension before the deadline, you will have a ‘failure to pay’ penalty of 0.5% of the balance. That penalty is also capped at 25%.
The Internal Revenue Service (IRS) has a multitude of penalties, fees and interest they can tack onto your tax bill and they waste no time doing so. The faster you reconcile your taxes, the better.
If you receive any notices or letters from the IRS, don’t ignore them. You may be giving up some of your rights to contest what the IRS is stating and you may be stuck with what the IRS thinks you owe. Meanwhile, the clock is ticking and your penalties, fees and interest continue to mount up.
One of your best defenses is to hire a qualified, experienced tax attorney. A Certified Public Accountant (CPA) is good at figuring out how much taxes you owe, but it’s a tax attorney who also knows the two types of law: laws that create the taxes and the laws that govern how the IRS must operate. Your tax attorney is an expert in both figuring out much you owe, and the laws the IRS should operate by. Many times the tax attorney will find errors in your favor. Tax attorneys know how to figure taxes, they know all the laws and rules, and they know how to deal with the IRS.
A tax attorney knows how to talk to the IRS, what to say and what not to say. The IRS is experienced and trained to develop a rapport with you and get as much information from you as possible. Their goal is to get money and close the case. When talking to the IRS yourself, you’ll likely reveal something you’ll regret later and end up paying more taxes. The IRS is not above taking advantage of your lack of knowledge.
Think of hiring a tax attorney as you would if you were going into court. You don’t know the law and wouldn’t appear in court without an attorney. Also remember, you will have the attorney-client privilege. What you disclose to your attorney is confidential.
The IRS agents have limited educational requirements and follow the Internal Revenue Manual. They aren’t tax attorneys with a law degree who can interpret the four million words of tax codes. A tax attorney can and will challenge the agents as to what the tax law means and how it should be applied to your advantage.
The IRS can be very scary with the power they hold. They can cancel your passport, place liens against your property, garnish your wages and freeze your bank accounts. Paying taxes is never pleasant, but having a tax attorney fighting on your behalf is something to seriously to consider.
Gantenbein Law Firm's Denver tax attorneys are considered among the very best in the state of Colorado, and are ranked by Super Lawyers as top lawyers. If you have a tax issue, including, but not limited to: innocent spouse relief; tax debt relief; tax exemptions; corporate tax structures; tax litigation; tax audits; tax planning; offers in compromise and more. To schedule a consult of your case, call 303-618-2122.
Gantenbein Law Firm's lawyers can also expertly assist in other areas that may overlap with your tax issue, such as: Business Law; Real Estate Law; Colorado HOA disputes; Foreclosure Defense; Credit Repair and Credit Dispute; Probate Law; and Wills, Trusts and Estate Planning. For more information regarding these areas of law, their Denver, Colorado office location, scheduling a consult of your case, or their attorneys, visit www.gantenbeinlaw.com or call 303-618-2122.