Posted by LWM Team on Thu, Jan 07, 2010
These are difficult economic times. According to the IRS, millions of taxpayers in desperate need of tax relief help applied for a 6 month extension to file their tax returns in 2009, some to take advantage of available tax credits such as the first-time homebuyer credit. While the number of taxpayers who successfully received this extension is not known, you can apply for this extension using Form 4868. While this may provide you with some tax relief help, if you are having difficulty paying your taxes, you can also arrange for a payment plan as well so that you can pay what you owe in equal monthly payments.
Some people in need of tax relief help choose to not file their taxes. This is not a recommended course of action. If you do not file your returns on time, you will be subject to penalties and taxes which will increase the amount that you owe. In addition, if you do not comply with IRS requests to file your taxes, they may also file a substitute claim on your behalf, based on information sources such as employment records. This is rarely in your favor and you may well be missing out on many other tax relief measures such as credits and deductions for expenses that only you can know about.
Once the IRS has filed your substitute claim, you will still be liable for any taxes owing. If you fail to either establish a payment plan or pay your total due, you could be looking at some very severe penalties and you may even be forced to sell off your assets, be subject to wage or bank account garnishing, and have a lien on your house. You may also be subject to criminal proceedings. Once this course of action is in place, you can still voluntarily disclose your finances and file a return. While this will not alleviate the pressure of penalties and interest charges, nor provide a great deal of tax relief help, it may stay any criminal proceedings or influence the decision of whether to proceed with them.