I received a tax bill of over $20,000. The problem was I was taxed on $77,000 which I never received a penny of. In the late 1980's a Financial Officer misdirected my husband and me to take a loan against a "Single Life Annuity". By 2011 I owed more than the policy was worth. I was then advised by the Financial Officer to cancel the policy. So that money I am being taxed on was paid to the Loan Co. I am an 81 yr. old widow living on SS and small pensions. I paid the IRS $1365.00 right away and then I paid $100.00 a month for May and June. Which is all I can afford. Is there some way I can set up a payment plan? Thanks in advance.
State/Country relating to question: Arizona
I sent a letter of explanation to the IRS.
Hi and welcome to Just Answer!
There is nothing you may do to avoid Tax Liability.However - there will be additional late payment penalties plus interest charges.
The best path forward might be to ask the IRS to abate penalties, however it would be very unlikely that interest charges are abated.. File a form 843 - http://www.irs.gov/pub/irs-pdf/f843.pdf to request the "accuracy related penalty" be abate based on reasonable cause. If you provide the reason like "I forgot" - I do not think it will be considered as reasonable - so be careful when prepare an abatement request. Here are instructions - http://www.irs.gov/pub/irs-pdf/i843.pdfGenerally - the IRS expects you to pay the full amount. If you cannot pay in full, you should pay as much as possible to reduce the accrual of interest on your account.You may apply for installment agreement. This agreement allow you to pay your full debt in smaller, more manageable amounts. Installment agreements generally require equal monthly payments. The amount of your installment payments and the number you make will be based on the amount you owe and your ability to pay that amount within the time The IRS can legally collect payment from you.
How to apply for an installment agreement?
If you cannot pay the full amount within 120 days, the fee for setting up an agreement is:$52 for a direct debit agreement; $105 for a standard agreement or payroll deduction agreement; or $43 if your income is below a certain level.
Let me know if you need any help.
Please be sure to ask if any clarification needed.
Taxes, Immigration, Labor Relations