Many times people don’t have a clue how much they owe the IRS.  In fact, they believe it is so much that if they even call to inquire the IRS is just going to carry them off to debtor’s prison.  And you can forget going to the local IRS office in person to see how much you owe because then you are just handing yourself over to them on a silver platter – right?

Absolutely not.  There is no debtor’s prison and just owing the IRS money is not a crime.  In order for you to make an informed decision about how to resolve your tax issues you need to know how much you owe and the breakdown of that debt by tax, penalties and interest.

You also need to know how much you owe so you can make a decision on how you are going to deal with your IRS debt.  Should you just enter into a payment plan or would an offer in compromise serve you better?  You can’t make a decision without knowing how much you owe.

The way to do this is by getting a record of account from the IRS.  A record of account reads like a bank statement or a bill from your power company.  It will show how much you owe, when penalties and interest were assessed against you, and what payments have been made on your behalf.

So how do you get a record of account?  There are three main ways:

1. Going to your local IRS office in person and requesting this information;
2. Calling the IRS and requesting this information;
3. Mailing a completed Form 4506-T requesting this information.

You can visit the IRS’ website www.IRS.gov to find the most up-to-date version of this form.

This information will be helpful while planning your offer in compromise so you can make sure you are getting a good deal with your offer in compromise.

Related posts:

1. Can You Go to Jail When You Owe Back Taxes?
2. Steps to Filing an Offer in Compromise: Step 1 – Filing Back Tax Returns
3. Is My Offer in Compromise Based on How Much I Owe?

Also, remember that if you owe and cannot afford to pay the tax, you should go ahead and file your income tax return to save on the failure to file penalty that can be up to 25% of the tax you owe.  Simply by filing the tax return you save this penalty and increase the amount of money that you keep in your pocket.

Related posts:

1. To File or Not to File…On Time
2. Do All of My Tax Returns Have to Be Filed to Release an IRS Wage Garnishment
3. Impact of Owing More Taxes on Installment Agreement

Here are the seminar details:

• When? 2 Sessions: Thursday, March 19, 2009 or Tuesday, March 24, 2009 at 7 pm
• Where? The Buck Mickel Center, Greenville Technical College
• How to RSVP: Online or by Telephone (1-800-216-1116)

You will also learn 5 Tax Secrets that will Save you Money:

1. Why it is important to file all of your tax returns, even if you cannot afford to pay the tax
2. How to keep from paying IRS penalties
3. Why you should always pay your company’s payroll taxes on time
4. How to avoid IRS audits and if audited, how to end it quickly
5. How to pay less taxes utilizing an offer in compromise

If you would like to attend one of the free seminars, you can visit the online RSVP page here.

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• 5% for overpayments (4% in the case of a corporation)
• 5% for underpayments
• 7% for large corporate underpayments
• 2.5% for the portion of a corporate overpayment exceeding $10,000.

For taxpayers other than corporate entities (like people), the underpayment rate is the Federal Short Term Interest Rate plus 3% and the overpayment interest rate is the Federal Short Term Rate plus 2%.  Here’s a link where you can check out what the current Short Term Applicaable Federal Rates are.

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