Steven Klitzner, the IRS Problem Resolution Attorney, joined Good Morning Keys on KeysTalk 96.9/102.5FM yesterday morning to talk about tax deadlines.
September 15 is the deadline for those who filed an extension for their corporate return. October 15 is the final deadline if you filed an extension for your personal return.
Klitzner said, “My best advice is, it’s already a little late on the corporate, but don’t wait any longer to do your personal return. There’s two reasons. First of all, if you have a preparer doing the work, and you give it to them at the last minute, when he or she is overwhelmed, they may miss something, they may not get it right. If you’re doing your return on your own, and you wait to the last minute, you may find you’re missing something, and it’s going to take you a little while to find it. So I know how painful it is, but this may be a good weekend coming up to take care of that October 15 deadline. If you file and pay October 15, that’s wonderful. You’re not going to get a failure to file penalty if you did your extension, but you will get a failure to pay penalty, and you will get interest going back to April 15. It’s going to be money that would be better off in your pocket than the government’s.”
The IRS is continuing to pursue people who are delinquent.
Klitzner said, “They may have less people, but that computer’s churning out some notice letters and some levies and some liens that we haven’t seen since before COVID. For instance, for many years, if someone owed the IRS money and they were getting Social Security, or it’s a business and it’s a doctor’s office, and they’re collecting Medicare, the IRS was just leaving that alone. Now they’re issuing these federal payment levies, which, out of nowhere, you’re going to find 15% of your Social Security gone, or all of the money the government owes you on some contract gone. So you have to be very careful. That’s what the computer’s spitting out. They went from literally none to a million, is kind of what’s happened. So be on the lookout for that. It may seem like you’re under the radar, but you might not be as far under as you think.”
It’s never too early to start preparing for the tax season.
Klitzner said, “Somebody called me the other day, and he’s an employee, and I said, well, good, you’re not going to owe any money, but he doesn’t withhold anything, or he withholds very little money. I get it, it’s tough to live now with that much being withheld, but you’re going to get a real bad shock in April, when you owe a lot more money than you can pay at one time. So change your withholding a little, get it more in line. I know that’s difficult, but it’s better to do it now than wait to April. If you’re an independent contractor, someone that gets paid with 1099s, the third quarter is due September 15. In other words, from 2024 if you owe $10,000, you have to make, assuming you make around the same amount of money, estimated quarterly payments in April, June, September and then January of $2,500 each, a quarter each, now we’re three quarters in. You haven’t paid anything in. It can be very, very difficult to catch up. I get it. I speak to people all the time. I know how they’re struggling with what looks like a very good income is just not enough money to go around. But you’ve got to find somebody else to put last, rather than the IRS, because they’re the ones that are coming back with a vengeance.”
If someone has the ability to pay, the IRS is going to find that out and get their money.
Klitzner said, “The ‘I don’t feel like’ it doesn’t work. The ‘I don’t have it, here’s proof I don’t have it,’ that works. You may get into an installment agreement for very little money, which may never pay the IRS, the 10 year statute of limitations may run before they get paid, or you might be not collectible. Many folks out there truly are not collectible, and the IRS will leave you alone, at least for a couple of years if they place you currently not collectible, but if you’ve got the funds, if you’re making the money, they’re going to want the money. That’s just how it works. Not everyone pays less, only those that can’t pay pay less.”
Is bankruptcy a way to get out of paying the IRS?
Klitzner said, “It can be. For personal taxes that were due more than three years ago that have been filed for two years may be eligible for discharge in bankruptcy. So if you had taxes owed in 2021, it was due April of 2022, if you filed it on time three years later, April of 2025, it may be dischargeable in bankruptcy. If you did an extension that year, you have to wait till October 15 of this year. But that’s a big thing that many people don’t know. Offering a compromise can work very well. I got a voicemail from one of those companies with the all new Fresh Start initiative. The Fresh Start initiative has not been added to by the IRS since 2012. It’s like me saying to you, do you have a smartphone? Yes, everyone does. Everyone uses the Fresh Start program. We don’t use the term anymore because it’s a regular term. The message I got from one of those companies soliciting me, thinking I had an IRS problem, but with the fresh start, I think the IRS, in retrospect, made a huge mistake with the name, because they didn’t realize it was going to be used by all these sham artists to make it seem like you could just call the IRS and ask for a fresh start. What it did was it did give some leeway to people. It added some numbers that you can subtract from what you have to give to the IRS. It gave a little more time to pay. It made it easier to set up an installment agreement. But it’s not, in reality, something where you can just declare it. You have to still and very often pay all of it. You don’t save anything. You just paid at a slower pace.”
If you have tax problems, make sure you work with a reputable company for help.
Klitzner said, “Luckily nowadays, of course, when you don’t know the number, you generally don’t answer it. That’s the worst thing you could do. I had a friend of mine who’s retired now, and he was having fun when he got spam calls just speaking to the people and giving them a hard time and leading them on. But what he didn’t realize is the more he answered, the more calls he would get to the point he can’t answer it anymore. He’s getting a call every half hour because they just sell your phone number saying, hey, this is a live one. Yes, call him. So be careful when there’s calls that you don’t know who it is.”
Remember, some bankruptcy lawyers really don’t deal with the IRS.
Klitzner said, “I don’t do bankruptcy, but call me and I’ll give you a referral of a bankruptcy lawyer that can give you the correct answer. If you have an IRS problem, the consultation with me is always free. Feel free to give me a buzz and if I’m not available, then we’ll set up a time I can call you back and we can go over your problem. If it’s something I can do to help you, I’ll tell you. If it’s not, if it’s something you can take care of yourself, sometimes some of these little problems can be taken care of by yourself, then I’ll give you some information, and you can just get them out of your life.”
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