Are you worried about your past-due taxes? If so, you’re not alone!
IRS non-compliance is a major problem among independent contractors in the trucking industry, as well as virtually any industry where there are independent contractors. Why is it such a common problem? For truckers, there are a few reasons:
- Before they start their businesses, no one teaches truckers about taxes.
- Because bookkeeping is tedious and difficult, it’s simple to get behind on the job.
- Drivers frequently get behind on tax payments and filing because they neglect bookkeeping.
It all adds up to drivers accruing back taxes and falling behind on their IRS payments, which is a major issue.
So, if you owe money to the IRS, what should you do? Although there are many different sorts of tips available, the bulk of it is either false, improper, or misguided for owner-operators in the trucking industry. If you’re a trucker who needs assistance with tax settlement, here are some tips you can consider:
- Obtain IRS compliance
- Communicate with the IRS
- Ensure IRS compliance
These are the fundamental actions you can do to put yourself in a position where you are eligible for a settlement and in filing compliance. Once you are in this position, you can concentrate on winning the negotiation while also gaining the skills necessary to maintain compliance going forward.
Now, let’s dive deeper into these steps.
Obtain IRS Compliance
So what does “Compliant” with the IRS mean? It’s rather easy:
Taxes must be paid on time every quarter (four times a year).
Each year, you must timely file your tax return and settle any outstanding balances.
Although it appears straightforward, maintaining compliance may be very challenging, particularly for Owner-Operators in the trucking sector.
You’ll live in a world where the IRS is but an afterthought if you can manage your compliance.
Let’s list a few circumstances that lead to persons failing to comply with IRS regulations:
Drivers are unable to pay the full amount of their required quarterly taxes.
Until their annual tax return, drivers postpone paying their taxes since they can’t afford to.
The failure of drivers to timely file their yearly tax returns
All of these issues are prevalent. To as far as possibly stay ahead of these:
- Avoid underestimating your quarterly taxes or QTEs.
- If you are unable to pay the whole sum required, pay as much toward your QTEs as you can.
- Even if you can’t afford the full cost, submit your yearly tax return.
- Request an extension if there is no chance that you will be able to submit on time; however, keep in mind that this is merely an extension of the filing deadline, NOT the payment deadline.
As you can see, there are numerous methods we might use to plan our efforts to be compliant. The management of your tax duties will become much simpler if you can discover a good strategy to stay in compliance, even though it is not always simple.
Get into a routine with your current tax forms and payments before worrying about getting into trouble with your tax obligations and finding yourself paying back taxes. You are qualified to negotiate a settlement on the back tax you owe once you’ve sorted out your current compliance. Our subsequent subject is so brought up.
Communicate With The IRS
Okay, let’s discuss what occurs when you can’t keep up with IRS compliance issues. What precisely happens if I don’t pay or file my taxes is one of the subjects relating to taxes and the IRS that is frequently the least understood.
First things first: it’s crucial to realize that the IRS won’t cooperate with you to arrange a resolution on your back taxes unless you’ve complied with filing requirements and made current tax payments.
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, the first step is to become IRS-compliant. However, you must also show the IRS that you are committed to maintaining compliance after being compliant.
The following actions must be taken to comply with the IRS:
You must resolve to stop engaging in the actions that got you into difficulty with the IRS.
You must complete any unfiled taxes right now.
You have the current year’s quarterly estimated tax payments that you need to make.
However, by the time they achieve compliance, many of our clients still owe the IRS large sums of money. In that instance, you can proceed to the procedure’ second step, which is IRS negotiation.
How To Communicate With The IRS
The first thing to keep in mind is that IRS agents are people. This is crucial to keep in mind when you negotiate with the IRS. The person you are speaking to on the other end of the phone is, after all, a person. The worst thing you could do is treat that person less favorably than a human being.
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:
When submitting compliance, ascertain your overall debt;
If you are unable to pay the whole amount you owe, speak with the IRS about setting up a payment plan.
Thirdly, you should prepare thoroughly for the negotiation you are about to enter.
You are prepared to draft your proposal for paying the IRS’s debt now that you are aware of your compliance with the law, are aware of what to anticipate from interactions with the IRS, and are aware of what to anticipate.
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 dialogue with the IRS is concluded if the financial form accurately and correctly reflects your financial condition. Obtaining a payment plan that will enable you to pay your regular living expenditures without interference from the IRS while also enabling you to prioritize current taxes going forward is the main objective here. NOT what the IRS wants you to pay, but rather what you can afford to pay, is more important to us.
Fourth, it’s crucial to successfully wrap up the discussion with the IRS about your request to enter an Installment Agreement.
It’s challenging and takes a lot of patience to get an IRS representative on the phone. You’d be shocked at how long it frequently takes to speak with an IRS agent on the phone live; occasionally, you have to spend the entire day on hold! Sometimes it’s best to have someone else complete this work on your behalf if you lack the patience to wait.
Take note of the agent’s badge number when they answer the phone for your records. Because you’ll probably wind up communicating with more than one agent during your negotiation, keeping records is an important component of any negotiation. Always remember 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 the response to your proposal. The IRS will provide notice of its choice by US Mail. The conditions of the agreement will be reaffirmed in that notice, which will also inform you if they have accepted your proposal. Once you receive that via mail, your collections are no longer active. Call them back and ask about the status of your account if you don’t hear from them after the two weeks they have to send you that notice.
Ensure IRS Compliance
Describe the management of IRS compliance.
Initially, make sure that any Installment Agreements (paying plans) that you have signed with the IRS are current.
Second, going ahead (each quarter), you must make on-time tax payments.
The final requirement is that you timely file your annual taxes.
It’s crucial to keep in mind that any missed payments, a fresh balance, or a past-due tax return will cause any current arrangement to default, and you’ll have to start over from scratch.
That being said, having basic knowledge about taxes and how to manage your past due taxes is important.
We hope this post helps you and if you have questions, please feel free to drop them in the comment section below.
