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Personal Tax Compliance
The IRS offers several programs to taxpayers with past-due federal income tax liabilities. The purpose of these various programs is to offer different ways for taxpayers to resolve their tax liabilities based on their unique financial situation. Some of the most common programs are the Offer in Compromise, Installment Agreement and Currently Not Collectible Status. However, before the IRS will seriously consider these, or any other possible resolution, the taxpayer must be fully compliant with their tax obligations. For an individual taxpayer, compliance consists of two major components.
First of all, the IRS will require the individual to file all past-due tax returns. In general, the IRS will require the filing of all tax returns for the past six years. However, in certain circumstances, the taxpayer may be required to file older tax returns. The taxpayer may not be required to file all returns if their income fell below the minimum filing requirement for specific tax years.
Secondly, the IRS will require the individual taxpayer to be in compliance with their ongoing tax payments. Most US taxpayers are required to make payments towards their federal income tax throughout the course of the year. Wage earners fulfill this requirement when their employers withhold taxes from their paychecks. Self-employed individuals are required to make Estimated Tax Payment four times a year. Therefore, before the IRS will agree to the resolution of an outstanding collection matter, they will require that wage earners claim the proper withholding with their employers and that self-employed individuals make all required Estimated Tax Payments.
It is important to keep the compliance requirement in mind as you prepare to resolve your past-due IRS tax liability.
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Source: RoniDeutch.com
