“Render unto Caesar the things that are Caesar’s, and unto God the things that are God’s.” [Matthew 22:21]
If you’re in the red, then the first step is to breathe. In and out, several times. You’re not the first person to be in this position and, I assure you, you won’t be the last.
Once you’ve found your center, distinguish between the type of taxes for which you’re ill-equipped. Are they income or trust fund taxes?
We’re only going to discuss income taxes for now. Trust fund taxes are another animal entirely and it will get its Animal Planet-type expose here in the not-too-distant future.
Income taxes for corporations were due on March 15th, and most other returns are due April 15th. You’ve got federal income tax, and a slew of state and local income tax and a few franchise tax payments.
File Your Return
I don’t care how much you owe. What people don’t realize is that there are two penalties: Failure to file and failure to pay. Failure to file is a percentage of what’s owed. Don’t increase your debt.
You Have Two Choices
- You can negotiate the tax or get on a payment plan, which we have discussed earlier. Form 9465, the Installment Agreement Request, gets you on the plan. Depending on how much you owe you may need 433-F, which is a Collection Information Statement. You may not need the latter and shouldn’t file it if you are currently making your installment payments.
- Or you can go offer-in-compromise. Form 656. This will slow everything down and eventually get you right with your higher power. This for the feds. State taxes are different. New York is far more aggressive, whereas California is more flexible — the Golden State sometimes wait every two years to collect.
Extensions only defer the failure to file until October 15th but it will not stop the failure to pay penalties. So all the more reason to file! No one who reads this should be at the post office at Moynihan Station on April 18th, first filling out their tax returns.I’ll be the happy SOB passing you with a couple of six-packs and a bottle of Prosecco.
You have some easy-to-follow steps, above. Be honest and use them as a guide to get you back in the black.
Just don’t flee the country. Don’t inspire me to write a post about that.
Contact Brinen & Associates with your tax questions