Here’s what not to do if you can’t pay your tax bill – the washington post ortega y gasset

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There’s a penalty for filing late and one for paying late. And interest accrues on top of penalties. Even if you don’t have the money, at least file on time. You might be tempted to just wait until you get the money or that the IRS won’t hunt you down.

What the companies don’t tell you is that getting your debt reduced is dependent on your being approved for the IRS’s Offer in Compromise program, or OIC, in which the agency agrees to accept less than your full tax payment under certain circumstances.

To qualify for an OIC, you have to show that you can’t pay your full tax liability because it will create a financial hardship. And by hardship, the IRS means just that. It will look at your income and assets to determine your ability to pay. Absent special circumstances, your offer will be rejected.

Color of Money question of the week Have you fallen prey to a tax debt relief scam? Also, if you couldn’t pay your tax bill, were you able to get help from the IRS? Send your comments to colorofmoney@washpost.com. Please include your name, city and state. In the subject line put “Tax Time.”

“My parents moved to Maryland from rural South Carolina in the 1950s,” wrote of Gregory F. Suber of Maryland. “Though they worked hard, they were never able to buy a home, but they were able to send three of their five children to college. Now, over 60 years later, all their children and a number of their grandchildren are college-educated homeowners. My parents emphasized homeownership over expensive automobiles and fancy jewelry. My father in particular often cited a phrase about a pot in a window that is not suitable for printing here, but most from my generation know how to fill in the blanks. The regression in black homeownership is disturbing to me. It seems that once again, our institutions need to focus on how to help people think critically and make wise choices. The ability to moderate expenditures and delay gratification has proven invaluable to me and my siblings. We pass this information on to our kids and anyone who is willing to listen. I hope there is a systematic way to reverse this trend without defaulting to the unproductive strategy of blaming the system. Blame is not a strategy for success. Education is.”

Suber went on to say, “I spent 25 years in the military, and due to length of time at a particular duty station or location (overseas), buying a home often did not seem the right economic choice. I lived in base housing in Michigan, broke even on my first home in Lubbock, Tex., after two years. Rented in Atlanta for a year, assumed a loan from another service member in 1980 in Dayton, Ohio, when interest rates were 17 percent. Possibly broke even after four years. Spent six years in Guam and lived in government housing and then moved to Springfield, Va., when assigned to the Pentagon in 1990. We spent 25 years in that house and had multiple offers when we sold in spring of 2016. However, if you add up all the renovations, such as new cabinets and countertops in the kitchen, wood flooring, carpet replacement, recessed lighting, large deck, fencing around the yard, two roofs, basement renovation, windows and doors replacement, landscaping, lawn mowing, etc., I often wonder if we really made any return on our payments. Truthfully, I think homeownership should be more a lifestyle decision than a financial one. It generally gives one more privacy, more freedom to change and ability to mold the living area into something you want. However, it comes with constant upkeep and renovation expenses if you are to remain competitive in the sales market. So no, homeownership was not our saving grace. Our saving grace was steady employment and our personal commitment to a regimented savings plan that left us with sufficient 401(k) and IRA balances at retirement.”

Judith Richardson Dunkley of Glen Ridge, N.J., wrote, “On the question of homeownership, it certainly has been a saving grace for my family. My mother was already suffering from moderate Alzheimer’s when her husband came down with sudden onset dementia. Being a prudent man, he had accumulated significant savings to cushion them in the event that his wife’s heart condition required prolonged and costly medical care. As it turned out, nearly all of that savings went to pay for his expenses, which included a few years in assisted living, followed by numerous hospitalizations and stints in rehab facilities well over and above what Medicare and his supplemental insurance covered, and finally a nursing home. By the time he passed away, my mother’s health had declined markedly, his money was all but gone, and her savings didn’t even cover the repairs needed to put her house on the market at a decent price. I had to chip in a bit of my own money to finish the repairs, but with the accompanying increase in value, the sale of her home provided enough money to get her into a very good facility and has paid her expenses for the last four-plus years. Without her home, I would not have been able to afford the kind of care she needed.”

With regard to the current state of black homeownership, Dunkley wrote, “I am not surprised that we have gone backward. Even before the housing crisis, banks and financial institutions were still playing games with mortgage applications for people of color, and discreetly redlining areas targeted for gentrification. The credit industry has remained biased, not to mention predatory. It is a complex issue that involves more than just finding ways to increase the number of black people who can get a mortgage and purchase a home. We have to find ways to make sure that once they get in a home, they can stay in the home, and hopefully pass it on to their children (or at least have enough equity to provide for end-of-life care when needed).”

“Homeownership has been a saving grace for our family,” wrote Scott Fossum of Houston, a regular reader and commenter. “More specifically, when we owned it and not the bank. A significant milestone was paying off the mortgage, which left us debt-free. The amount we could save every month went up greatly, which has compounded over the years. Our family mental health also improved when we owned the house. Worries about mortgage payments, foreclosures, being thrown out just went away. When you worry about debt, you can dream up some incredible scenarios (think attacking zombie stuff).”

Newsletter Comments Policy Please note, it is my personal policy to identify readers who respond to questions I ask in my newsletters. I find it encourages thoughtful and civil conversation. I want my newsletters to be a safe place to express your opinion. On sensitive matters or upon request, I’m happy to include just your first name and/or last initial. But I prefer not to post anonymous comments (I do make exceptions when I’m asking questions that might reveal sensitive information or cause conflict.)

Have a question about your finances? Michelle Singletary has a live chat every Thursday at noon where she discusses financial dilemmas with readers. You can also write to Michelle directly by sending an email to michelle.singletary@washpost.com. Personal responses may not be possible, and comments or questions may be used in a future column, with the writer’s name, unless otherwise requested. To read more Color of Money columns, go here.