GRAND RAPIDS – Stop. I know it’s April 15, and I know that you don’t want to spoil your weekend. Your return is complete and it is ready to file, but you owe $10,000 to the IRS. What do you do?

Time for a multiple-choice quiz. Do you:

a. Just forget about filing?

b. Go visit your local pawnshop and ask them how

much you can get for your hula hoop collection?

c. Discuss alternatives with your tax professional?

The proper answer is c. Do not just forget about filing. Timely filing is paramount. You can timely file Form 4868 and get an extension of time to file, but this is not an extension of time to pay. If you do not file timely and you do not file an extension, you will be charged with a late filing penalty of 5 percent per month. (There is a maximum penalty, but I will leave that for another time.) So, if you need more time to file, submit by the due date Form 4868. You then have until August 15 to file, but you will incur late payment and interest on the amount of tax due.

Another Possibility

So, if you owe tax, you can file an extension of time to file, but if the return is correct and all data has been accumulated and presented to the office, the return should be timely filed. Before filing, however, speak to the office. Maybe Form 9465 should be filed WITH the return. This is an Installment Agreement Request. It should be filed with the return (though it can be filed after the IRS bills you). The form provides that the IRS may give you up to 60 months (5 years) to pay.

If you owe $10,000 or less, and the following three conditions are met, the IRS cannot turn down your request for an installment agreement.

Condition one: During the past 5 years you have

timely filed all income tax returns and paid any

income tax due, and have not entered into an

installment agreement for payment of income tax.

Condition two: The IRS determines that you cannot

pay the tax owed in full when it is due and you give

the IRS any information needed to make that

determination.

Condition three: You agree to pay the full amount

you owe within 3 years and to comply with the tax

laws while the agreement is in effect.

Plan now for next year.

There are other techniques that might be available for balances due, but the Form 9465 and timely filing are the most easily applied. If you do find you owe tax for this filing year, please let the office help you keep this from occurring in the future by either discussing the need for paying estimated taxes, (the first payment for the 2005 year is due April 15, 2005,) or by helping you to complete the Form W-4, in which your withholding level is determined.

April 15th is not only the end of last year’s tax season. It is also the first step to insure that next year you do not have a balance due.

For more information, click on Buchholz & Associates

To contact Buchholz & Associates phone: (616) 530-5881