What to do if you still owe taxes from 2005?

Question

I filed 2005 return and started a monthly payment plan to pay back my federal taxes. I stopped paying though... Now that I am ready to file 2006, I still owe that money and money for this year I do not have. Do I have any options?

Answer 1

You need to continue to make your payments as promised, your installment agreement will default or cancel once the IRS processes your return and discovers that you owe again, You will need to contact the IRS to see if they will allow you to combine the 2 years into one agreement.

Do you know what is causing you to owe each year? If you are a W2 wage earner you need to correct your W4 withholding immediately to correct the problem, If you do not correct this the IRS can instruct your employer to do a LOCK IN withholding, the employer will be required to withhold taxes as per the IRS instuctions, You can and will be fined $500.00 for completing a fraudulent W4. There is a new procedure that has been put in place as of 03/26/2007.that requires a Customer Service Representative to request the LOCK IN when it is determined that the taxpayer is not correcting the cause of the continued balance due

See IRM 5.19.11.3.4.1
http://www.irs.gov/irm/part5/ch19s22.htm...

To ensure that you have the proper amount withheld use the withholding calculator at the IRS website using your last pay stub it will help determine what you should be claiming on your W4 to ensure that you do not owe on your taxes next year
http://www.irs.gov/individuals/page/0,,i...

Answer 2

Quit digging yourself in deeper than you already are. Change your W-4 so you don't owe again next year, and talk to the IRS about a payment plan for what you already owe. And this time stick with it - they get very unhappy if you just blow them off, and start seizing your assets.

Answer 3

Start paying or you will face seizure of your bank accounts, other assets, and garnishment of your wages.

Stopping payments on a payment plan is just about the worst thing that you could possibly do. That tells the IRS that you're not serious about clearing your debt and makes it MUCH more likely that they will start involuntary seizure and collection actions against you.

Answer 4

Pay up.