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Interest on Fed Tax Liability?

1,256 Views | 10 Replies | Last: 5 yr ago by BoDog
BoDog
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4:13p, 3/20/19
AG
So it appears I owe a relatively sizable amount to uncle sam this year. In conversation with my CPA I asked what if I cannot pay the full amount by April 15th? He states that I will incur a 1%/month penalty on the balance. If I correctly assume that my cash may be better used elsewhere and gladly will eat the 1% interest, why wouldn't someone do this? What else am I missing?

Thanks in advance!
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4:25p, 3/20/19
Long Live Sully
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In reply to [removed post] • 4:28p, 3/20/19
AG
Must know Squareone
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BoDog
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4:29p, 3/20/19
AG
Yes. Indeed.
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The Collective
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4:42p, 3/20/19
AG
The % isn't correct. That is the penalty that you pay for not paying in a timely manner. It actually starts at .5% and increases to 1% after the IRS issues a notice to levy property (sounds wonderful). On top of that, you will also pay interest which is fed short-term rate + 3%. Yes, you may be able to find something more productive with your cash, but long-term it is going to create some issues for you.

edit: Guess we are saying the same thing now that I reread your post. .5% penalty + .5% interest / month. That will eventually go up to be closer to about 1.5%, and the IRS will also be a pain in your ass.
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LOYAL AG
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6:46a, 3/21/19
AG
You can play this game til about November then they'll start to threaten to take your money by force. You'll get a few months there then they'll take your money.

In other words it's a short term game. If you think you can beat the cost with a greater return then do it but pay them off by October or so.
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Mas89
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In reply to BoDog • 7:31a, 3/21/19
AG
Don't kick a sleeping dog.
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aduey06
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10:36a, 3/21/19
Wesley Snipes thinks this is a great idea.
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MemphisAg1
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6:44p, 3/21/19
AG
If I owed the government money, I'd pay it quickly. Don't want any reason for them to snoop deeper into my affairs. Nothing good can come from it.
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30wedge
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7:10p, 3/21/19
You can do an installment agreement request and as long as you abide by it after they accept it, they won't come after you. I would think though, that having them as a lender is only slightly better than having Vinnie and Vito holding the note.
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b0ridi
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In reply to 30wedge • 8:20p, 3/21/19
30wedge said:
You can do an installment agreement request and as long as you abide by it after they accept it, they won't come after you. I would think though, that having them as a lender is only slightly better than having Vinnie and Vito holding the note.
IRS charges very low interest rates/penalties if you pay late or have to set up an installment agreement. Much better than personal loans, credit cards, payday loans, etc. Hardly "Vinnie and Vito". Now, if you knowingly commit tax fraud (a crime)...
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BoDog
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8:28p, 3/21/19
AG
My point exactly. Im going to slow pay this through the summer. Will let you all know what transpires.
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