In a recent Wall Street Journal article by Laura Saunders entitled “File Your Taxes, Even if You Can’t Pay,” Bryan C. Skarlatos provided advice to taxpayers on how to minimize financial fallout this tax season, during the unprecedented times of COVID-19.
Excerpts from the article are below:
“To get its money, the IRS can file a lien on your property that wrecks your credit, seize your bank account, and take your wages. It can even get money from your IRA or 401(k) savings account, and you’ll owe tax on the withdrawal,” says Bryan Skarlatos, a criminal tax attorney with Kostelanetz & Fink in New York.
The IRS isn’t known for its mercy, but it has programs and other measures for taxpayers who can’t pay what they owe. These can be confusing, especially for filers who haven’t used them before, so here are steps to take and pitfalls to avoid in this extraordinary tax year.
- Consider how to raise funds. Mr. Skarlatos warns that penalties and interest continue to compound on unpaid taxes if you use an IRS payment plan. So he recommends borrowing the funds from a bank, a 401(k), a relative or even a credit card, if possible. Congress eased terms for 401(k) loans due to the pandemic.
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