If you are employed by a company, then it is likely that your earnings are computed regularly, and you will automatically pay the correct amount of tax to the IRS. However, if you have additional income from elsewhere or are self-employed, then you will need to ensure that any extra money you receive is accounted for and the correct tax is paid.
You will need to submit a tax return every year and if you do that, then you can be sure the IRS will calculate the correct tax allowance for you. You will then be able to pay any tax that you owe. However, if you choose not to declare extra income, then you could be risking trouble for yourself in the form of unpaid taxes. When that happens, you may be in need of the services of a tax lawyer, such as Tax Defense Partners, to help you with Maryland tax debt relief.
If you fail to file a tax return in the relevant year, the IRS will try to contact you about it to advise your duty to file. If you continue to disregard letters or do not contact them to either pay or suggest a repayment solution, they will take other measures. These can be hefty in comparison to initial contact and may include:
File a tax return on your behalf but with the highest estimates they can
Prevent you from renewing a business license
File a lien against your (for your assets) or any property you own
Suspend any payments from the State if your business is connected with State business
Summon you to a hearing that will revoke any sales tax license you hold
Initiate legal proceedings
If you fail to pay your taxes, then you can quickly accrue extra debt on top of it. Maryland issues a 13% interest rate on unpaid state tax. This means that from the moment your tax return is due, you will start to accrue interest on the unpaid tax. You will also have to pay a penalty of up to 25%. If you are under financial hardship and are unable to pay your tax debt, then Tax Defense Partners may be able to come to an agreement with the IRS on your behalf. This could be in the form of reducing the amount of money you owe. However, you will also need to come to an agreement with Maryland state as they will pursue you for payment indefinitely.
You might think that the IRS tax bill should be settled first, but if you come to an agreement with them and you are not able to agree tax payment with the state of Maryland, the debt will grow larger as there is no statute of limitations on this tax bill.
If you are able to come to a tax repayment agreement with the state of Maryland, then there is a possibility that the IRS will either defer payment, or not force you to make payment that you cannot afford.
If you file all your tax returns on time, you are in a position to be able to bargain or negotiate about your taxes if you are unable to pay them in full. This is not possible if you have failed to submit tax returns for a period of time.