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The countdown is on and in a few days from now you will be required to file your 2020 return by May 17, 2021. But there are some myths surrounding taxes. Let’s examine a few:

Myth #1

If you owe the IRS large amounts of money, you’re going to jail.

The IRS will not incarcerate you simply because your debt is large. There may be several reasons why your have a large tax liability. For example, it could simply be that you have experienced a substantial income increase and therefore not enough taxes were withheld. Under reporting and failure to disclose income could land you in jail.

Myth #2

If you file a joint return, you are stuck with the debt for the rest of your life.

The IRS has an Innocent Spouse Relief option you can exercise and thereby be relieved of responsibility for paying penalties, taxes or interest if your spouse or former spouse improperly reported items or omitted items on your joint tax return without your knowledge.

Myth #3

You can’t make a deal with the IRS to settle your debt.

An Offer in Compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can’t pay your full tax liability, or doing so creates a financial hardship.

Myth #4

The IRS does not forgive Interest and penalties. 

While obtaining relief may be difficult there are interest and penalty sections of the Internal Revenue Code in which you may qualify for relief,  if you made an effort to comply with the requirements of the law, but due to circumstances beyond your control, you could not comply with tax requirements.

Myth #5

Business taxes are not your personal responsibility. 

Business taxes known as Trust Fund Recovery Penalty, may be assessed against you as an individual or personally, if you are deemed responsible for collecting or remitting withheld income and employment taxes from employees and failed to do so.

If you need help distinguishing myths from facts, schedule a consultation with our office today! We would be happy to serve you.