Okay, so you’re worried about paying your overdue taxes? Well.. the good news is that YOU’RE NOT ALONE!
In the trucking industry, as in almost every other sector where there are independent contractors, IRS non-compliance is a significant issue. Why is this issue so prevalent? There are a few factors that apply to truckers:
- Before becoming business owners, truckers are not taught about taxes.
- It’s simple to fall behind on the road since bookkeeping is tedious and difficult.
- Due to their neglect of bookkeeping, drivers frequently neglect to pay and file their taxes.
The result of all of this is that drivers end up owing back taxes to the IRS, which is a major issue.
So what should you do if you owe the IRS money? You may come across all types of advice, but the majority of it is either untrue, misdirected, or inappropriate for owner-operators in the trucking sector.
Although this approach appears to be straightforward, the devil is in the details, so believe us!
- Obtain IRS Compliance
- If necessary, negotiate with the IRS
- Controlling IRS compliance
Let’s now go into greater detail about each of these steps.
Obtain IRS Compliance
What exactly does “Compliant” with the IRS exactly mean?
Actually, it’s as easy as this: Each quarter (four times a year), you must pay your taxes on time. Each year, you must submit your tax return on schedule and settle any outstanding balance.
Even as an Owner-Operator in the trucking sector, it may be very challenging to maintain compliance despite how straightforward it may seem.
If you can control your compliance, you’ll live in a society where the IRS is merely an inconvenience.
Let’s list a few circumstances that lead to IRS non-compliance by individuals:
- Drivers are unable to pay their entire quarterly tax amount owed.
- When the annual tax return comes around, drivers wait to pay their taxes because they can’t afford to.
- Drivers are unable to submit their yearly tax returns on time.
These issues are all fairly prevalent. To avoid these as much as you can…
- Do not undervalue your quarterly taxes, also referred to as QTEs.
- If you are unable to pay the entire sum required, pay as much as you can toward your QTEs.
- Even if you are unable to pay the full amount, submit your annual tax return.
- Request an extension if there is no chance that you will be able to file on time. Keep in mind, however, that the extension only extends your filing deadline and NOT your payment deadline.
As you can see, there are a variety of methods we can use to plan our strategies to remain compliant. While maintaining compliance is not always simple, doing so will make handling your tax obligations much simpler.
If you do encounter trouble with your tax duties and discover that you owe back tax, you should first focus on getting into a routine with your current tax files and payments. You are qualified to negotiate a settlement on the back tax you owe once your current compliance has been calculated, which brings us to our next subject.
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Negotiate With The IRS
That is… if it’s needed, like when you can’t keep up with IRS compliance issues. What exactly happens if I don’t pay or file my taxes is one of the most misunderstood issues relating to taxes and the IRS.
The IRS will not engage with you to set up a settlement on your past taxes until you comply with filing and current tax payments, so it is crucial to realize this right away.
Why? Because unless you demonstrate to the IRS that you are ready and able to catch up on your taxes, they will not consider negotiating the balance owed. To avoid falling behind in the future is to become IRS compliant. However, you must also show the IRS that you are committed to maintaining compliance after being compliant.
Let’s go through a few items to make sure you are IRS-compliant.
- You must commit to changing the behaviors that got you into problems with the IRS.
- You must complete any pending tax returns.
- Current Year Quarterly Estimated Tax Payments must be made up to date.
Despite this, we find that by the time clients achieve compliance, many of them still owe the IRS a sizable sum of money.
So… How Do You Negotiate With The IRS?
As you concentrate on negotiating with the IRS, it’s crucial to keep in mind that the person on the other end of the phone is, in fact, a living, breathing human being. The worst thing you could do is to treat that person less than a human.
Second, it’s critical to be aware of what to anticipate from negotiations with the IRS. Everybody’s experience with the IRS Negotiation process is unique, but in general, there are just two things that must be done each time:
- Identify your overall debt before filing compliance;
- If you are unable to pay the whole amount you owe, request a payment plan from the IRS.
Third, it’s crucial to prepare thoroughly for the negotiation you’re about to enter.
You are prepared to draft your proposal for paying the IRS’s debt now that you are aware that you are in compliance and know what to anticipate from interactions with the IRS.
It’s crucial to have a clear picture of your money to support the desired monthly payment. The IRS uses several different financial documents to calculate how much you should pay each month.
The IRS is informed of your financial condition and the negotiation is concluded after the financial form accurately and completely reflects your financial situation. The objective is to obtain a payment plan that enables you to prioritize current taxes going forward while still enabling you to meet your regular living expenditures free from IRS interference. What you can afford to pay is more important to us than what the IRS wants you to pay.
Fourth, it’s crucial to successfully wrap up the discussion with the IRS about your request to be included in an Installment Agreement.
It takes a lot of persistence to get an IRS representative on the phone. You’d be shocked at how long it frequently takes to reach an IRS agent on a live call; occasionally, you have to spend the entire day on hold! It’s occasionally preferable to have someone else handle this work on your behalf if you lack the patience to wait.
Take note of the agent’s badge number as soon as they answer the phone for your records. Recordkeeping is important since, more often than not, you’ll speak with more than one agent during your negotiation. Always make sure to get their information and record your call!
It’s time to examine your financial form and suggest your ideal monthly payment amount once you have an agent on the line. The basis on which you’ll base your agreement with the agency is helping them comprehend your circumstance!
Finally, you will watch for your proposal to be accepted. The IRS will notify you of their choice by US Mail. That notification will confirm the agreement’s conditions and inform you if they have accepted your proposal. You no longer have any active Collections once you receive that by mail. It is crucial to phone them back and inquire about the status of your account if you do not receive that letter within the two weeks they have to deliver it to you.
Keeping Up With IRS Compliance
How is maintaining IRS compliance conducted?
- First and foremost, make sure you adhere to any Installment Agreements (paying schedules) you have with the IRS.
- Second, you must continue to pay your taxes on time each quarter.
- Finally, you must always file your annual taxes on time.
It’s crucial to keep in mind that any missed payments, additional balance, or past-due tax return will cause any current arrangement to default, and you will have to start over from scratch.
Although in theory, this is quite easy to understand and uncomplicated, as we previously explained, it may be very simple to fall behind on your IRS Compliance.
We hope this helped you as a truck driver. If you have more questions about this, we’re more than willing to help.
Drop them in the comments or send us a message here.
