Surviving tax season

Tackle overdue taxes this year

For some, the new tax season might serve as a stressful reminder of past taxes that have yet to be filed and paid.

If you’re one of the many taxpayers who owe tax debt this season, addressing the issue sooner rather than later can save you from penalties, interest and other more serious consequences.

Here’s what you can do to get back on track.

1 If you get a notice, read it The longer you delay reading and responding to unpaid tax notices, the more serious your tax situation could become.

If you continue to ignore notices, the IRS may resort to severe measures, including tax liens, wage garnishment, asset seizure and passport restrictions. And if you owe state taxes, you could face additional collections and garnishments.

However, the IRS and state tax agencies will always try to contact you before escalating to more extreme measures.

2 Set up a payment plan Most taxpayers can set up short- or long-term payment plans, including installment agreements, through the IRS website. To apply for one online, you must owe less than $50,000 in combined tax, penalties and interest for a long-term plan or less than $100,000 for a short-term plan.

Once you contact the IRS and set up a plan, the government will stop sending notices about your tax debt because collection has already been accomplished, Portera says.

3 Contact a pro If you’re dealing with tax authorities, owe large amounts of money or have a tax situation that you feel unable to handle on your own, Kenneth Portera, an enrolled agent and owner of Kenneth Portera and Associates in New Jersey, recommends enlisting the help of a licensed tax professional, such as a certified public accountant, enrolled agent or tax attorney.

When you don’t file your return, the IRS puts together a substitute return for you with a proposed assessment of what you owe.

According to Robert Persichitte, a CPA at Delagify Financial in Colorado, some tax preparers will look at your substitute return for free and tell you if it needs to be amended. Sometimes, a licensed tax professional can negotiate with the IRS to reduce the amount owed. In serious cases, they may help you apply for an offer in compromise, an agreement with the IRS that settles your tax liability at a lower amount.

This article was provided to The Associated Press by the personal finance website NerdWallet. Want to suggest a personal finance topic that Quick Fix can address? Email apmoney@ap.org