Will new tax deadlines help taxpayers with a big tax bill?

The Internal Revenue Service (IRS) recently announced another extension to tax deadlines. The agency’s most recent news release states the current extensions are expanded to include trusts, estates, corporations and other filers who would need to file and pay taxes between April 1,2020 and July 15, 2020.

This means that essentially anyone with any tax obligation can wait until July 15, 2020 to file and pay their taxes.

What is the purpose of these extensions?

The agency is attempting to help taxpayers deal with financial obligations during the coronavirus pandemic. These extensions are helpful but may not be enough for all taxpayers. The United States Government Accountability Office reports an estimated 21% of taxpayers were expected to owe the IRS on their 2019 returns.

For many taxpayers, this additional bill may be unmanageable.

What options are available for those who cannot pay their tax bill?

Those who cannot make these payments have options. Two examples include:

  • Offer in compromise. This option involves settling your bill with the IRS for less then is actually owed. Those who wish to request an offer in compromise must provide the agency with sufficient documentation to back up the offer. The agency is particular and a failure to meet their expectations can result in a denied request.
  • Installment agreement. This is essentially a payment plan. Instead of paying the entire tax bill in one lump sum, an accepted installment agreement allows the taxpayer to make more reasonable payments over a set period of time.

These are just two options that can help taxpayers who are struggling to manage their tax bill. An attorney experienced in tax law can discuss the benefits and risks of these and other potential options that may work for your specific situation.

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