Legal and financial difficulties await those who are in tax debt, but there are options.
An article published on CBS affiliate KFVS 12’s website lists a number of steps taxpayers can take to avoid the consequences of delinquent tax debt.
Those in a serious amount of debt should file a tax return. Not doing so will add to your debt significantly. Filing your own return rather than allowing the government to file it will ensure you get all exemptions or deductions.
Make sure taxes are turned in on time. There is a 5 percent penalty for every month they are late, which can add up to 25 percent.
The article also encourages taxpayers to contact the IRS directly. The government agency may reduce or waive penalties due to extenuating circumstances like a death in the family, serious illness or any other “reasonable cause.”
Bankruptcy can’t be relied upon because of 2005 bankruptcy reform law, which requires many consumers to file Chapter 13 bankruptcy. Chapter 7 bankruptcy protection wipes out all debt, whereas Chapter 13 sets up payment plans.
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