I received a letter from IRS saying that I owe some taxes from 2004 please help?

Question

That was the first time and only time I tried doing it my self, I made a mistake by adding the wrong amount on the interest paid on my mortgage so I owe 1235 back to them. I'm planning to paid them as next tax season, so if I ignore it for now would that affect me?

Answer 1

Don't ignore it, but don't panic. You have probably received a CP 2000, a proposed assessment. If you agree, check the box on page 3, Step A for option 1, full agreement, then skip down to Step B and check option 3. Complete the Form 9465 they included with the CP 2000 to tell them how much you want to pay each month and which day of the month you want to pay it by. Unless your suggested monthly payment is laughable, the IRS will approve it. There will be a $43 set up fee that will be taken out of the first monthly payment.

If you ignore the problem, the tax will be assessed by default and after several months of letters you will get a final notice. The late payment penalty (FTP), which had been 0.5% per month, will jump to 1% per month. If you set up an installment agreement, the FTP rate drops to 0.25% per month.

Answer 2

give them a call and set up an installment plan. Whatever portion is not paid will continue to accrue interest (approx 7%)AND late payment penalties (approx 5%) (only the late filing penalty ceases once the return is filed). In addition, if you ignore them long enough, they can put tax liens on any property you have as well as hitting your credit report with the lien. Go ahead and complete your 2005 return though - see if there is a refund or you owe. If you owe, then you could throw this into the installment plan amount due as well. If a refund, ask them to apply this to the 2004 amount due to reduce it.

Answer 3

There is some terrible advice on this Q.

There will not be any additional penalties only interest because you have already filed the return. You can wait till April 2007 and see if you will get a refund that will cover the $1,235. The interest rate is nominal. If you have the money....then yes pay it now to avoid additional interest. Nobody's coming after you...

Answer 4

If they are correct and you know it, the best thing that you can do is pay them as soon as humanly possible. The interest and penalties that rack up are not worth the headaches, trust me. Take out a loan to pay it off, it will be cheaper in the long run.

You can't "make up for it" on next year's taxes - doesn't work that way, sorry...

Good luck.

Answer 5

Yes, you need to contact them and set up a payment plan it can be as low as $50.00 a month until next years tax comes in. You can not ignore it because you are being charged alot in interest and points.

Answer 6

i owe the IRS money from my 2004 taxes, its not like they will come after you, you can call to set up a payment plan or ignore it and they will take it out of your next tax return....

Answer 7

You can call the IRS to set up payments to pay it back. Just ignoring the letter will hurt you in the long run.

Answer 8

There should be information on how to contact them for assistance or requesting an extension. I had it happen, too, but it was only 30 bucks so I just sent it.

Answer 9

They will slap penalties on you in addition to the late filling, payments ect. My advise- pay it right away. DO NOT wait till next time.

Answer 10

you ignore it, the penalities will keep going up. they don't want to wait. you better pay it today otherwise you can be charged with tax evasion. Why would you want to incur another 9 months of penalties?