Still Got Unpaid IRS Taxes? – Tax Time Again

Still Got Unpaid IRS Taxes? – Tax Time Again image 0 All

It is that time of the year when you are expected to file your 2010 IRS taxes. Do you still have unpaid IRS taxes from previous years? The solution is simple, but not easy if you are faced with a huge amount of unpaid IRS taxes.

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You need to contact the IRS and make a payment arrangement to cover any unpaid back taxes owed. It might be helpful for you to go ahead and file your taxes for the year 2010 to find if you owe. That way, when you contact the IRS for unpaid back taxes, you can include current year debt with what you owe for previous years as well.

It is beneficial for you to find a tax attorney to help you file your tax report for the year 2010 and also to help you with any previous year’s unpaid taxes. The tax attorney can help you avoid many penalties and fines from the previous years of taxes owed.

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The 1040X, 941X and 1120X If a client has improperly filed a 1040, 1040A, or 1040EZ tax return, and the error is deemed to be serious, the client must first file a 1040X with the correction. If the client has made a number of errors over the course of several years, the client is required to file a 1040X return for each year in question. The same rule would apply to clients who make substantial errors on Form 941 payroll tax forms or Form1120 corporate tax forms. In these scenarios, the taxpayer will must file a 941X or 1120X to correct the error or errors. The format of these amended returns is simple. The taxpayer must put the original return income, deduction and credit figures in the first column and the amended figures in a separate column. An explanation of the new figures must accompany this form.

This may mean that the surviving spouse’s unfettered access to the assets in the trust will be somewhat limited. In many cases, there is a trustee other than the spouse who handles the principal distributions from the family trust, so the surviving spouse has to ask another trustee for principal distributions. This may or may not be the optimal solution for the estate plan for this size estate.

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You might even have a return coming back from the year 2010. When this happens you can apply any amount that you will receive in a refund to what you owe in unpaid taxes.

When Taxpayer needs to pay additional tax This is by contrast a far trickier situation. If a taxpayer suddenly realizes that the tax liability has been understated on the original Form 1040, then an amended return must be filed and any additional tax owed must be paid. If this is not done, and the Internal Revenue Service discovers the error, the government will bill the taxpayer for the unpaid tax plus interest (currently at a 4% annual rate) and levy a failure-to-pay interest-charge penalty (at a 6% annual rate). Depending on the nature and size of the error, taxpayer might be slapped with additional penalties, too. But the IRS has the ability to waive those penalties if a taxpayer shows a taxpayer had a reasonable cause for the underpayment. Taxpayers in this situation are strongly advised to contact a CPA or an enrolled agent whose tax continuing education will help them determine the best course of action.

With all of these opportunities, the one potential problem is that this new law is a two year law. By the end of that time, Congress needs to do something such as to abolish the federal estate tax, or to set it at the current number more permanently. If it fails to do so, we may end up back at the $1.0 million lifetime exemption amount.

Harris Smith offers advice on home equity line of credit and obtaining credit. Applying for Debt Consolidation can help.

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