Floyd Mayweather, Another Celebrity With Tax Issues…Here is what you should know…

Recently, the news broke that Floyd Mayweather may be in some tax trouble. According to reports, he owes millions in back taxes totaling $22 million. This is a lot of money but should be easily handled by someone with his means, right?

Floyd Mayweather has earned hundreds of millions of dollars throughout his career, including $220 million for his fight with Manny Pacquiao. While his fights lead to huge paydays, this hasn’t stopped him from being under threat of collection enforcement and IRS Levies on his assets.

Mayweather and his lawyers have asked the IRS for a short-term payment installment until after he cashes in on his upcoming fight with Connor McGregor. There is speculation that he could make as much as $200 million from this fight. Mayweather’s representatives are asking for the IRS to be patient because they are hoping to pay the debt with the proceeds. Unfortunately for them, the IRS is having no part in that idea. The IRS believes that Floyd Mayweather has enough financial assets that could be sold or borrowed against to pay all, or even a portion of the tax debt now.

If you are like Floyd Mayweather and find yourself struggling to pay your tax debt, you are in luck! The IRS does allow you to pay over time depending on your circumstance. There are also a few different types of payment options that allow you to pay over time that I’ll discuss.

Tax Payment Options

One option is to set up a payment agreement or installment agreement. This applies to those who owe less than $50,000 and have filed all required tax returns. An installment agreement can be filed online.

Another option is to file for a short term extension for up to 120 days to pay in full. Paying this way will help avoid any additional fees that may incur. If you can’t pay within the full 120 days, you may be permitted to make monthly installment payments.

There are strings attached to payment agreements. All prior year’s tax returns must be filed, as well as there may be user fees applicable for setting up the payment arraignment. You must also pay the IRS interest.

There is one last option to paying off tax liability. This option will not be available to Floyd Mayweather but is available to pretty much everyone else who may have this issue. This is an Offer in Compromise. An Offer in Compromise is applicable when you can’t pay and your tax debt is larger than your assets. This will be a reduced amount that the IRS agrees can be paid and equals what the IRS believes can be reasonably collected based on your assets.

Offer in Compromises may be granted if the IRS believes that there is doubt as to whether you could pay the entire liability, or if collecting the tax would create an economic hardship. However, the hardship is difficult to prove. I have recently helped complete one of these. From my experience, an Offer in Compromise is completed with a Form 656 along with submitting a $186 application fee.

Contact Tax Law Offices

Hopefully, you will never owe the amount of tax liability that Floyd Mayweather does, but if you ever find yourself with serious IRS issues, it is a good idea to seek professional help from a tax attorney who specializes in cases like this. Contact Tax Law Offices today for a free consultation, and to learn how we may be able to assist you as you seek a way to repay your taxes.

http://www.cbsnews.com/news/owe-back-taxes-dont-do-what-floyd-mayweather-did/

by  Shavonne Taylor. Ms. Taylor is a Law Case Analyst and occasional blogger at Tax Law Offices.