What Does it Mean to be Current & Compliant With the IRS and Why do I Care?

As a whole being current and compliant with the IRS is extremely important but if you owe tax to the IRS being current and compliance is mandatory for the IRS to consider and formalize any agreement such as an installment agreement of offer in compromise and remaining current and compliant is required to comply with the terms of your agreement.  In this article we explain what it means to be current and compliant for taxpayers and business owners in Columbus, OH. Please get in touch if you have further questions about an issue with the IRS. 

Being Current

Being current with your tax obligations means that you have filed all tax returns that would be currently due.  This could mean all of your 1040 individual income tax returns have been filed or as a business, all of your 941 employment tax returns have been filed.  If you have any late returns, you are not considered to be current with your tax filing obligations.  

Being Compliant

Being in compliance means that not only have you filed all returns but that you have made all necessary tax payments based upon your requirements.  If you are a self-employed individual you are required to make quarterly estimated tax payments based upon your prior years tax or current year income.  If you are a business with employees, being in compliance with your 941 employment tax requirements means you have made all necessary federal tax deposits for the current quarter.  If you are even one payment behind, you are not in compliance.

Why Might I Care About Being Current and Compliant?

If you owe tax to the IRS and are trying to formalize an installment agreement or have an offer in compromise accepted, the IRS will not consider or will reject any proposal if you are not current and compliant.  Thus, the first step in resolving any tax debt is making sure you are current and compliant.  Furthermore, if you have an installment agreement in place or have had an offer in compromise accepted, you must maintain your compliance to comply with the terms of the agreement.  Thus, your installment agreement or offer could default if you accrue a new tax liability or fail to timely file a return.

In addition to complying with your current agreement, the failure to remain current and compliance leads to tax penalties.  If you fail to file a return, the IRS will assess you failure to file penalties.  If you fail to timely pay tax, the IRS will assess you failure to timely pay penalties.  These penalties can be quite stiff and are not always easy to have waived or abated.  Thus, it is always in your best interest to timely file returns and timely pay any associated tax. 

Questions About Compliance? Get In Touch Today

If you have any questions related to your tax filing or tax payment obligation you can speak with a Columbus tax attorney by contacting The McGuire Law Firm. Get in touch today for a free consultation, or call us at 614-810-6416.