Step 4 of 4 in curing tax pain for good: Paying Taxes using the 4Rs Framework

The 4R Framework: how to Resolve Tax Problems

“If the job were easy, you wouldn’t have a job.  Overcome obstacles in the road, but appreciate them, as they will guard your success that lies on the other side of them.”

In the 4 steps to curing tax pain, the final one is the most intuitive of all: pay the taxes.  Once this is done, then you can finally put it behind you.

So if you do your tax return and have an amount due, then paying it would theoretically put the problem to bed.  So if you can pay your tax, then great, pay it and reap the peace of putting another year of tax problems behind you.

However, it’s not always as smooth or easy as that.  Maybe the bill is a bit higher than anticipated.  Maybe it’s unpayable or otherwise difficult to pay. 

The thing is, failure to file a tax return is a federal crime, but failing to pay a tax bill is not.  It’s not ideal, but it happens.  And I’m not going to make you feel bad about it.  It sucks enough to have IRS notices and financial uncertainty.  But if you prepare your tax return and it’s unagreeable, then you need to know how to handle it.

In this post, I’ll go over the framework I use when a tax due is too high to pay easily.

So there are 4 ways to handle a tax you can’t pay:

1.       Recalculate it

2.       Refinance it

3.       Renegotiate it

4.       Reverse it

Let’s take it one step at a time…

R1: Recalculating

"Perseverance is failing 19 times and succeeding the 20th." - Julie Andrews

If you get a tax due that you can’t pay, the first thing you should do is check the numbers.  Recalculate it.  Income, deductions, credits, elections, tax treatments, etc.

Each tax return that you do should be seen as a draft.  Whether that’s the first, second, or final draft.  And they are all going to have differences.  So if you do a first draft, and the number seems off, then don’t be afraid to ask questions and chip away at the numbers.  You’ll often end up with something different, as there’s almost always more that can be done.

To make sure that you don’t have to recalculate a return and go through the numbers a bunch of times, you should tie them out.

You can do this in excel.  This should give you all the information, calculation, and source docs with references.  Personally, I do the tax return in excel before I even open any tax preparation software.  That way, I am just using the software to put in the information that I already know, and I’m not relying on it to calculate for me.

For business tax returns, this should be in the form of a P&L and a Balance Sheet that is already put in excel, and adjusted for tax purposes.  Then you pop it into the return and work it until the numbers agree.

But lets say that you run the numbers multiple times and still the bill is too high.  Well, in that case, it’s time to consider other options…

R2: Refinance

"The only difference between death and taxes is that death doesn't get worse every time Congress meets." - Will Rogers

Tax debt is an ugly thing, and should be avoided at all costs by paying taxes as they’re due, and making estimated payments for taxes in the future.  But sometimes, especially if you’re behind on taxes, there’ll be a lot of tax due, and it’ll be more than what’s in the bank.  In those cases, you will want to refinance it in some way, as the IRS is a creditor that you don’t want to be dealing with.

Here are some ways to refinance tax debt:

File a payment plan or installment agreement

Pay it with a credit card

Take out a loan

Whatever you do, you want the IRS to be satisfied, as they are one of the worst creditors out there.

However, sometimes, refinancing it can be taxing in and of itself.  So if this is not doable, then you’ll want to consider the next possibility…

R3: Renegotiate

“Reality is largely negotiable – Tim Ferris”

When even refinancing tax debt seems impossible, there is still another way: renegotiate it.  This is where you tell the IRS what you owe, what you have, and what you can reasonably pay.  It nice to finally get the letter from the IRS that your tax debts are forgiven, but it’s a slog to get there, and this should really only be done as a last resort.

To renegotiate IRS tax debt, you can file an Offer in Compromise (OIC) with the IRS.  This is where you show why the tax debt that you owe is unpayable.  You’ll show them your assets, income, and spending habits, among other things.  You can file this on your own, but it’s often best to work with a tax resolution specialist, since it’s a timely process and relatively high stakes.

And in certain cases, you might be able to simply get the tax waived entirely by utilizing the last method…

R4: Reverse it

“It’s amazing how much you can get in life by simply asking.”

Maybe you’ve seen the posts on LinkedIn about how people have gotten their penalties forgiven by the IRS by filing for abatement.  In many cases, back taxes and penalties can be forgiven, but it should be a last resort.  However, like many things in life: it doesn’t hurt to ask.

To get penalties abated, you have to either file tax forms or call the taxing agency. 

One example of this is the First Time Partnership Late Filing Penalty Abatement.  Basically, the penalties for filing a 1065 or 1120S late are $245 per partner per month in 2025.  So filing a 2 partner 1065 tax return late by 6 months result in a penalty of $2,940.  However, this is generally forgiven the first time that you incur the penalty, if you file a penalty abatement with the IRS.

You have to know to ask, what to ask, why to ask, and how to ask.  But if you know that, then you can save yourself from some ugly taxes.

Wrapping it up

“How am I complicit in creating the conditions that I say I don’t want?”

Taxes are burdensome, but the pain that you feel because of them is not a requisite.  That cost on your mental health and well-being is going to be much more of a downer than spending the time and energy to fix it.  Because the healthy man has many wishes, but the sick man has but one. 

If you’ve been following my content, then you have all the tools necessary to get your taxes caught up.  It’s just a matter of doing it.  And not tolerating the negative conditions that come from putting it off.

This is your time to say “no more, never again, I’ve had it!”  And make a commitment to never feeling tax pain ever again.  Right now.  It doesn’t have to be a lengthy process to get this fixed.  It happens the moment you decide to make it happen.  And once that happens, you will figure out how to do it.

And if you need help, then obviously I’m not going to leave you hanging. 

Book a complimentary CPA consultation with me and let’s solve any tax problems that you might have, so you can turn pain into peace and live the life that you deserve.