Knock Out Your Back Taxes
Floyd Mayweather has recently made headlines for more than his upcoming fight with Conor McGregor. In fact, it is reported that he owes millions of dollars to the IRS in unpaid taxes incurred over the past few years. While we have known that he owed a sum of money to the IRS, we only recently became aware of the actual total: a whopping $22 million. That’s right, Floyd Mayweather owes $22 million in unpaid taxes to the IRS. It’s quite shocking that Mayweather, a professional athlete who earns millions in a single evening, is facing threat of IRS collection and levy on his assets. Especially shocking, since he made $220 million from his 2015 fight against Manny Pacquiao.
Mayweather and his lawyers have requested a short-term payment installation until after he receives payment for his fight on August 26, against Conor McGregor. This fight could earn Mayweather upwards of $200 million. His lawyers are optimistic about their request for patience from the IRS, since they would surely get paid in full using a portion of the proceeds from the upcoming fight.
However, the IRS is not as forgiving and patient as Mayweather and his team were hoping. The IRS is considering that since Mayweather presently has ample current financial assets that can either be sold or borrowed against to pay the back taxes owed.
If you too owe back taxes and are having difficulties paying your debt, the IRS allows several options for you to pay over time.
An option you have is to make a partial payment of your total and then submit the Online Payment Agreement Application. This option is available to those who owe less than $50,000 in combined taxes, penalties, and interest. Additionally, you must have filed all required tax returns. Taxpayers or their hired representatives can submit this application and receive immediate approval notifications.
There are two options for repayment. The first option is to pay in full by securing a short-term extension for up to 120 days. This option is attractive since you avoid additional payment fees. However, if you are not able to pay in full within 120 days, you could request to make monthly installment payments. This option is less attractive since you must have filed all prior years’ tax returns in addition to paying a user fee of $105, or half of that amount if you choose automatic deduction from a bank account. On top of that, you are responsible for paying interest on the unpaid balance, which is currently around 4 percent.
If, however, you are unable to pay, and your debt to the IRS exceeds your assets, you can file the Offer in Compromise document. This can be done yourself, or filed with the help of a tax preparer. Typically, the IRS will agree to be paid an amount that equals what they believe can be collected by the sale of things such as your real property, cars, and bank accounts.
If there is a substantial doubt that you will ever be able to pay in full, the IRS will most likely grant the Offer in Compromise. Additionally, if it is determined that paying the tax owed will cause an economic hardship to the debtor, the IRS is more likely to grant the Offer in Compromise. To request the Offer, send in Form 656 and the $150 application fee.
If you, like Floyd Mayweather, are experiencing tax troubles, you should seek the help of a professional tax consulting firm. Colonial Tax Consultants houses experts when it comes owing taxes. Contact us today for a free consultation regarding your situation.