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Common Back-Tax mistakes

At M&M Financial, we deal with complicated back-tax debt problems every day.  We realize that when you become an expert at something, it can be easy to forget that not everyone knows even the basics of what you do.  So, we take great care to educate our clients on the fundamentals of tax compliance, resolution and reduction.

We recently compiled a list of the common mistakes our new clients make before they hire M&M.  For so many of our clients, steering clear of a slip-up or two early on would have helped them avoid some sleepless nights and expensive penalties.  Here is a list of the most common mistakes we come across with new clients.

I didn’t file my tax return because I didn’t have the money to pay the tax due.

Maintaining current tax compliance is the priority when resolving your back-tax debt.  This means all necessary tax returns must be filed.  The IRS will not consider a resolution other than a lump sum, full payment if you are out of compliance. And, the IRS takes non-filers very seriously.  Civil and even criminal penalties may be assessed to those that refuse to file tax returns.  The failure to file a tax return penalty can be 10% or more of the amount due on the return.  Avoid penalties.  File your tax returns even if you don’t have the money to pay the tax due.  Hire M&M and we’ll determine which tax returns you are missing and help you get back into current tax compliance.

I haven’t been paying my current taxes because I’ve been making payments toward my back taxes.

Remember, current tax compliance the priority.  Pay your current taxes before making any payments toward your back-tax debt.  To qualify for a resolution, such as an IRS Installment Agreement, you must be able to maintain your current taxes. Employers must make current Federal employment tax deposits.   The IRS will not allow your business to keep its doors open if it continues to accrue new tax liabilities.  Individuals need to adjust their withholdings with their employer or make ES payments to avoid new tax liabilities.  M&M can help guide you back to tax compliance and resolve your tax debt for good.

I haven’t done anything because I’ve been waiting for the IRS to contact me.

Waiting for the IRS to make the first move is a gamble that many lose.  Be proactive.  Taking steps to gain current tax compliance and resolve your liabilities before the IRS has you on their radar is always best.  M&M will contact the IRS on your behalf and take the steps necessary to resolve your tax debt.  We already know the steps to resolution.  We don’t need to wait for the IRS to get started.

I haven’t responded to my IRS notice or my Revenue Officer’s call because I don’t have the time or money to full pay my tax debt.

Ignoring the IRS is just about the worst thing you can do.  Sooner or later you will wake up with no money in your bank account(s) because the IRS will have taken it to pay your tax debt, leaving you in a scramble to keep your doors open and put food on the table.  Deal with the headache today to avoid a full meltdown tomorrow.  M&M will communicate with the IRS for you.



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